424B3
Table of Contents

Filed pursuant to Rule 424(b)(3)
Registration No. 333-259392

 

LOGO    LOGO

MERGER PROPOSAL—YOUR VOTE IS VERY IMPORTANT

Dear Bioventus Stockholders and Misonix Stockholders:

On July 29, 2021, Bioventus Inc., which is referred to as “Bioventus,” Oyster Merger Sub I, Inc., a wholly owned subsidiary of Bioventus, which is referred to as “Merger Sub I,” Oyster Merger Sub II, LLC, a wholly owned subsidiary of Bioventus, which is referred to as “Merger Sub II,” and Misonix, Inc., which is referred to as “Misonix,” entered into an Agreement and Plan of Merger, as it may be amended from time to time, which is referred to as the “merger agreement,” that provides for the acquisition of Misonix by Bioventus. Upon the terms and subject to the conditions of the merger agreement, Bioventus will acquire Misonix through a merger of Merger Sub I with and into Misonix, with Misonix continuing as the surviving corporation, which is referred to as the “first merger,” followed by a merger of Misonix with and into Merger Sub II, with Merger Sub II continuing as the surviving entity and a wholly owned subsidiary of Bioventus, which is referred to as the “second merger” and, together with the first merger is referred to as the “mergers.” The combined company created by the mergers will be named Bioventus Inc.

Upon the successful completion of the mergers, each issued and outstanding share of Misonix common stock (other than treasury shares of Misonix, shares held by a subsidiary of Misonix, Bioventus or Merger Sub I, and shares held by Misonix stockholders who have not voted in favor of the Misonix merger proposal and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be converted into the right to receive either an amount in cash equal to $28.00 or 1.6839 validly issued, fully paid and non-assessable shares of Bioventus class A common stock, based on the election of the holder thereof and subject to automatic proration and adjustment in accordance with the terms of the merger agreement, as described below and in the accompanying joint proxy statement/prospectus. Bioventus stockholders will continue to own their existing shares of Bioventus common stock. The exchange ratio is fixed and will not be adjusted for changes in the market price of either Bioventus class A common stock or Misonix common stock between the date of signing of the merger agreement and the completion date of the first merger. As such, the market value of the merger consideration payable to Misonix stockholders will fluctuate with the market price of the Bioventus class A common stock and will not be known at the time that Misonix stockholders vote on the merger agreement. Upon completion of the mergers, former Misonix stockholders are expected to own approximately 25% of the outstanding shares of Bioventus common stock and Bioventus stockholders immediately prior to the mergers are expected to own approximately 75% of the outstanding shares of Bioventus common stock. Bioventus class A common stock is traded on the Nasdaq Global Select Market, which is referred to as “Nasdaq,” under the symbol “BVS.” Misonix common stock is traded on Nasdaq under the symbol “MSON.” We encourage you to obtain current quotes for both the Bioventus class A common stock and the Misonix common stock before voting at the special meetings of stockholders described below.

The aggregate amount of cash payable by Bioventus in the mergers will be equal to $10.50 multiplied by the number of outstanding shares of Misonix common stock at 5:00 p.m., New York City time, on the election deadline. If the aggregate amount of cash that holders of Misonix common stock elect to receive exceeds the available cash amount, the number of shares of Misonix common stock as to which the holder elected to receive cash consideration will be reduced on a pro rata basis and each such share will be paid $28.00 per share in cash, and the remainder of such shares of Misonix common stock as to which a cash election was made will be paid 1.6839 shares of Bioventus class A common stock. In such case, for each share of Misonix common stock as to which the holder elected to receive the stock consideration or made no election, the holder will receive 1.6839 shares of Bioventus common stock. If the aggregate amount of cash that holders of Misonix common stock elect to receive is less than the available cash amount, each share of Misonix common stock as to which the holder elected to receive cash consideration will receive $28.00 per share in cash. In such case, the remaining excess cash consideration will be first paid at a rate of $28.00 for each share of Misonix common stock as to which the holder made no election (with such cash being distributed on a pro rata basis based on the number of shares for


Table of Contents

which no election was made if the number of such shares multiplied by $28.00 is less than the remaining cash to be paid), and thereafter (to the extent any excess cash consideration remains) at a rate of $28.00 per share in cash to the shares of Misonix common stock as to which the holder elected to receive the stock consideration on a pro rata basis based on the amount of cash remaining to be paid, if any. The balance of the shares of Misonix common stock will receive 1.6839 shares of Bioventus class A common stock.

While the value of merger consideration to be received by a specific holder of Misonix common stock will depend on whether they elect to receive the cash consideration, elect to receive the stock consideration, or make no election, if all Misonix stockholders elect to receive the cash consideration (or if all Misonix stockholders elect to receive the stock consideration), each holder of Misonix common stock would receive, on an aggregate basis, $10.50 in cash and 1.0524 shares of Bioventus class A common stock for each share of Misonix common stock that they own. Based on the Bioventus class A common stock price of $ $16.63 per share, which is the average of the daily volume weighted average price per share for the seven consecutive trading day period up to and including July 27, 2021, two trading days prior to the entry by Bioventus and Misonix into the merger agreement, the implied value of the merger consideration to Misonix stockholders (assuming all Misonix stockholders elect to receive the cash consideration or all Misonix stockholders elect to receive the stock consideration), was $28.00 per share of Misonix common stock. On September 1, 2021, the latest practicable trading day before the date of the filing of this joint proxy statement/prospectus, the closing price of Bioventus class A common stock on Nasdaq was $14.98 per share, resulting in the implied value of the merger consideration to Misonix stockholders (assuming all Misonix stockholders elect to receive the cash consideration or all Misonix stockholders elect to receive the stock consideration), was $26.27 per share of Misonix common stock. The value of the merger consideration to Misonix stockholders will continue to fluctuate with the value of Bioventus class A common stock until the completion of the mergers.

Bioventus and Misonix will each hold special meetings of their respective stockholders to vote on the proposals necessary to complete the mergers. Such special meetings are referred to as the “Bioventus special meeting” and the “Misonix special meeting,” respectively.

At the Bioventus special meeting, Bioventus stockholders will be asked to consider and vote on (i) a proposal to approve the issuance of shares of Bioventus class A common stock to Misonix stockholders in connection with the first merger, which proposal is referred to as the “Bioventus share issuance proposal,” and (ii) a proposal to adjourn the Bioventus special meeting to solicit additional proxies if there are insufficient votes to approve the Bioventus share issuance proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Bioventus stockholders. The Bioventus board unanimously recommends that Bioventus stockholders vote “FOR” each of the proposals to be considered at the Bioventus special meeting.

At the Misonix special meeting, Misonix stockholders will be asked to consider and vote on (i) a proposal to adopt the merger agreement, which proposal is referred to as the “Misonix merger proposal,” (ii) a proposal to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Misonix named executive officers that is based on or otherwise relates to the transactions contemplated by the merger agreement and (iii) a proposal to adjourn the Misonix special meeting to solicit additional proxies, if necessary or appropriate, if there are insufficient votes to approve the Misonix merger proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Misonix stockholders. The Misonix board unanimously recommends that Misonix stockholders vote “FOR” each of the proposals to be considered at the Misonix special meeting.

We cannot complete the mergers unless the Bioventus share issuance proposal is approved by Bioventus stockholders and the Misonix merger proposal is approved by Misonix stockholders. Your vote on these matters is very important, regardless of the number of shares you own. Whether or not you plan to attend your company’s respective special meeting, please vote by proxy over the internet or telephone using the instructions included with the accompanying proxy card, or promptly complete your proxy card and return it in the enclosed postage-paid envelope, in order to authorize the individuals named on your proxy card to vote your shares at the applicable special meeting.


Table of Contents

The accompanying joint proxy statement/prospectus provides you with important information about the special meetings, the mergers and each of the proposals. We encourage you to read the entire document carefully, in particular the information under “Risk Factors” beginning on page 39 for a discussion of risks relevant to the mergers.

We look forward to the successful completion of the mergers.

Sincerely,

 

/s/ Ken Reali        

Ken Reali

Chief Executive Officer

Bioventus Inc.

  

/s/ Stavros Vizirgianakis        

Stavros Vizirgianakis

Chief Executive Officer

Misonix, Inc.

* * * * *

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the mergers, the adoption of the merger agreement, the Bioventus class A common stock to be issued in the first merger or any of the other transactions described in the accompanying joint proxy statement/prospectus or determined if the accompanying joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying joint proxy statement/prospectus is dated as of, and is first being mailed to Bioventus and Misonix stockholders on or about, September 24, 2021.


Table of Contents

LOGO

4721 Emperor Boulevard, Suite 400

Durham, North Carolina 27703

(919) 474-6700

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON OCTOBER 26, 2021

To the Stockholders of Bioventus Inc.:

Notice is hereby given that Bioventus Inc., which is referred to as “Bioventus,” will hold a special meeting of its stockholders, which is referred to as the “Bioventus special meeting,” virtually via live webcast on October 26, 2021, beginning at 11:00 a.m., Eastern Time.

In light of ongoing developments related to the COVID-19 pandemic, the Bioventus special meeting will be held solely in a virtual meeting format via live webcast. You will be able to virtually attend and vote at the Bioventus special meeting by visiting www.virtualshareholdermeeting.com/BVS2021SM, which is referred to as the “Bioventus special meeting website.”

The Bioventus special meeting will be held for the purpose of Bioventus stockholders considering and voting on the following proposals:

 

  1.

to approve the issuance of shares of Bioventus class A common stock to the stockholders of Misonix, Inc., which is referred to as “Misonix,” in connection with the merger contemplated by the Agreement and Plan of Merger, dated July 29, 2021, as it may be amended from time to time, which is referred to as the “merger agreement,” by and among Bioventus, Oyster Merger Sub I, Inc., a wholly owned subsidiary of Bioventus, Oyster Merger Sub II, LLC, a wholly owned subsidiary of Bioventus and Misonix, which issuance is referred to as the “share issuance” and which proposal is referred to as the “Bioventus share issuance proposal”; and

 

  2.

to approve the adjournment of the Bioventus special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Bioventus special meeting to approve the Bioventus share issuance proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Bioventus stockholders, which proposal is referred to as the “Bioventus adjournment proposal.”

Bioventus will transact no other business at the Bioventus special meeting except such business as may properly be brought before the Bioventus special meeting or any adjournment or postponement thereof. The accompanying joint proxy statement/prospectus, including the merger agreement attached as Annex A thereto, contains further information relating to these matters.

Only holders of record of Bioventus common stock at the close of business on September 22, 2021, the record date for voting at the Bioventus special meeting, which is referred to as the “Bioventus record date,” are entitled to notice of and to vote at the Bioventus special meeting and any adjournments or postponements thereof.

The Bioventus board has unanimously determined that the terms of the merger agreement and the merger are fair to and in the best interests of Bioventus and its stockholders, and has approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger and the share issuance. Accordingly, the Bioventus board unanimously recommends that Bioventus stockholders vote:

 

   

“FOR” the Bioventus share issuance proposal; and

 

   

“FOR” the Bioventus adjournment proposal.


Table of Contents

Your vote is very important, regardless of the number of shares of Bioventus common stock you own. The parties cannot complete the merger unless the Bioventus share issuance proposal is approved by Bioventus stockholders. Assuming a quorum is present at the Bioventus special meeting, approval of the Bioventus share issuance proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast on the Bioventus share issuance proposal.

Your vote is important. Whether or not you plan to virtually attend the Bioventus special meeting, please vote by proxy over the internet or telephone using the instructions included with the accompanying proxy card, or promptly complete your proxy card and return it in the enclosed postage-paid envelope, in order to authorize the individuals named on your proxy card to vote your shares of Bioventus common stock at the Bioventus special meeting. If you hold your shares through a broker, bank or other nominee in “street name” (instead of as a registered holder) please follow the instructions on the voting instruction form provided by your bank, broker or nominee to vote your shares. The list of Bioventus stockholders entitled to vote at the Bioventus special meeting will be available at Bioventus’ headquarters during regular business hours for examination by any Bioventus stockholder for any purpose germane to the Bioventus special meeting for a period of at least ten days prior to the Bioventus special meeting. If you would like to examine the list of Bioventus stockholders of record, please contact Bioventus’ Corporate Secretary at tony.dadamio@bioventus.com.com to schedule an appointment or request access. If Bioventus’ headquarters are closed for health and safety reasons related to the COVID-19 pandemic during such period, the list of stockholders will be made available for examination electronically upon request to Bioventus’ Corporate Secretary, subject to satisfactory verification of stockholder status. The list of Bioventus stockholders entitled to vote at the Bioventus special meeting will also be available for examination by any Bioventus stockholder during the Bioventus special meeting via the Bioventus special meeting website.

If you have any questions about the transactions, please contact Bioventus at (919) 474-6700 or write to Bioventus Inc., Attn: Corporate Secretary, at tony.dadamio@bioventus.com.com.

By Order of the Board of Directors,

/s/ William A. Hawkins III            

William A. Hawkins III

Chairperson

Bioventus Inc.

Durham, North Carolina

Dated: September 24, 2021


Table of Contents

LOGO

1938 New Highway

Farmingdale, New York 11735

(631) 694-9555

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON OCTOBER 26, 2021

To the Stockholders of Misonix, Inc.:

Notice is hereby given that Misonix, Inc., which is referred to as “Misonix,” will hold a special meeting of its stockholders, which is referred to as the “Misonix special meeting,” at Misonix’s corporate offices, located at 1938 New Highway, Farmingdale, NY 11735 on October 26, 2021, beginning at 10:00 a.m., Eastern Time.

As part of Misonix’s precautions regarding the novel coronavirus or COVID-19, Misonix is planning for the possibility that the meeting may be held solely by means of remote communications. If Misonix takes this step, Misonix will announce the decision to do so in advance, and details on how to participate, including details on how to inspect a list of stockholders of record, will be posted on our website at www.misonix.com and filed with the SEC as proxy material.

The Misonix special meeting will be held for the purpose of Misonix stockholders considering and voting on the following proposals:

 

  1.

to adopt the Agreement and Plan of Merger, dated July 29, 2021, as it may be amended from time to time, which is referred to as the “merger agreement,” by and among Bioventus Inc. (which is referred to as “Bioventus”), Oyster Merger Sub I, Inc., a wholly owned subsidiary of Bioventus, Oyster Merger Sub II, LLC, a wholly owned subsidiary of Bioventus, and Misonix, a copy of which is attached as Annex A to the accompanying joint proxy statement/prospectus and which proposal is referred to as the “Misonix merger proposal”;

 

  2.

to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Misonix named executive officers that is based on or otherwise relates to the transactions contemplated by the merger agreement, which proposal is referred to as the “Misonix compensation proposal”; and

 

  3.

to approve the adjournment of the Misonix special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Misonix special meeting to approve the Misonix merger proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Misonix stockholders, which proposal is referred to as the “Misonix adjournment proposal.”

Misonix will transact no other business at the Misonix special meeting except such business as may properly be brought before the Misonix special meeting or any adjournment or postponement thereof. The accompanying joint proxy statement/prospectus, including the merger agreement attached as Annex A thereto, contains further information relating to these matters.

Only holders of record of Misonix common stock at the close of business on September 22, 2021, the record date for voting at the Misonix special meeting, which is referred to as the “Misonix record date,” are entitled to notice of and to vote at the Misonix special meeting and any adjournments or postponements thereof.

The Misonix board has unanimously determined that the terms of the merger agreement and the merger are fair to and in the best interests of Misonix and its stockholders, and has approved and declared advisable the merger agreement and the transactions contemplated thereby, including the mergers. Accordingly, the Misonix board unanimously recommends that Misonix stockholders vote:

 

   

“FOR” the Misonix merger proposal;


Table of Contents
   

“FOR” the Misonix compensation proposal; and

 

   

“FOR” the Misonix adjournment proposal.

Your vote is very important, regardless of the number of shares of Misonix common stock you own. The parties cannot complete the merger unless the Misonix merger proposal is approved by Misonix stockholders. Assuming a quorum is present at the Misonix special meeting, approval of the Misonix merger proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Misonix common stock.

Your vote is important. Whether or not you plan to attend the Misonix special meeting, please vote your shares of Misonix common stock either electronically over the Internet, by telephone, or by completing and returning the accompanying proxy card. Voting instructions are provided in the accompanying joint proxy statement/prospectus and in the Notice of Internet Availability of Proxy Materials. By submitting your proxy promptly, you will save us the expense of further proxy solicitation. We encourage you to submit your proxy as soon as possible by Internet, by telephone or by signing, dating and returning the accompanying proxy cards provided.

If you have any questions about the transactions, please contact Misonix at misonixproxy@misonix.com or write to Misonix, Inc., Attn: Secretary, at our principal executive offices at 1938 New Highway, Farmingdale, New York 11735.

If you have any questions about how to vote or direct a vote in respect of your shares of Misonix common stock, please contact, MacKenzie Partners, Inc., Misonix’s proxy solicitor, by telephone toll-free at 1-800-322-2885, Monday through Friday (except bank holidays), between 8:00 a.m. and 8:00 p.m., Eastern time, or by email at proxy@mackenziepartners.com.

By Order of the Board of Directors,

 

/s/ Joseph P. Dwyer

Joseph P. Dwyer
Secretary
Misonix, Inc.

Farmingdale, New York

Dated: September 24, 2021


Table of Contents

REFERENCES TO ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about Bioventus and Misonix from other documents that Bioventus and Misonix have filed with the SEC and that are not contained in and are instead incorporated by reference in this joint proxy statement/prospectus. For a list of documents incorporated by reference in this joint proxy statement/prospectus, see “Where You Can Find More Information.” This information is available for you, without charge, to review through the SEC’s website at www.sec.gov.

You may request a copy of this joint proxy statement/prospectus, any of the documents incorporated by reference in this joint proxy statement/prospectus or other information filed with the SEC by Bioventus or Misonix, without charge, by written or telephonic request directed to the appropriate company at the following contacts:

 

For Bioventus stockholders:    For Misonix stockholders:

Bioventus Inc.

Attention: Corporate Secretary

tony.dadamio@bioventus.com

(919) 474-6700

  

Misonix, Inc.

Attention: Secretary

misonixproxy@misonix.com

(631) 694-9555

In order for you to receive timely delivery of the documents in advance of the special meeting of Bioventus stockholders to be held on October 26, 2021, which is referred to as the “Bioventus special meeting,” or the special meeting of Misonix stockholders to be held on October 26, 2021, which is referred to as the “Misonix special meeting,” as applicable, you must request the information no later than October 19, 2021.

If you have any questions about the Misonix special meeting, or need to obtain proxy cards or other information, please contact MacKenzie Partners, Inc., Misonix’s proxy solicitor, by telephone toll-free at 1-800-322-2885, or for banks and brokers, collect at (212) 929-5500, Monday through Friday (except bank holidays), between 8:00 a.m. and 8:00 p.m., Eastern time, or by email at proxy@mackenziepartners.com.

 

 

LOGO

The contents of the websites of the SEC, Bioventus, Misonix or any other entity are not incorporated in this joint proxy statement/prospectus. The information about how you can obtain certain documents that are incorporated by reference in this joint proxy statement/prospectus at these websites is being provided only for your convenience.


Table of Contents

ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by Bioventus, constitutes a prospectus of Bioventus under Section 5 of the Securities Act with respect to the shares of Bioventus class A common stock to be issued to Misonix stockholders pursuant to the Agreement and Plan of Merger, dated July 29, 2021, as it may be amended from time to time, by and among Bioventus, Merger Sub I, Merger Sub II and Misonix, which is referred to as the “merger agreement.” This document also constitutes a proxy statement of each of Bioventus and Misonix under Section 14(a) of the Exchange Act. This joint proxy statement/prospectus also constitutes a notice of meeting with respect to each of the Bioventus and Misonix special meetings.

Bioventus has supplied all information contained or incorporated by reference in this joint proxy statement/prospectus relating to Bioventus, Merger Sub I and Merger Sub II, and Misonix has supplied all such information relating to Misonix. Bioventus and Misonix have both contributed to such information relating to the mergers.

You should rely only on the information contained or incorporated by reference in this joint proxy statement/prospectus. Bioventus and Misonix have not authorized anyone to provide you with information that is different from that contained or incorporated by reference in this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated September 24, 2021, and you should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any date other than such date unless otherwise specifically provided herein.

Further, you should not assume that the information incorporated by reference in this joint proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this joint proxy statement/prospectus to Bioventus or Misonix stockholders nor the issuance by Bioventus of shares of Bioventus class A common stock pursuant to the merger agreement will create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

Unless otherwise indicated or the context otherwise requires, when used in this joint proxy statement/prospectus:

 

   

“Bioventus” refers to Bioventus Inc., a Delaware corporation;

 

   

“Bioventus adjournment proposal” refers to the proposal to approve the adjournment of the Bioventus special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Bioventus special meeting to approve the Bioventus share issuance proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Bioventus stockholders;

 

 

   

“Bioventus board” refers to the board of directors of Bioventus;

 

   

“Bioventus class A common stock” refers to the Class A common stock, par value $0.001 per share, of Bioventus;

 

   

“Bioventus class B common stock” refers to the Class B common stock, par value $0.001 per share, of Bioventus;

 

   

“Bioventus common stock” refers Bioventus class A common stock and the Bioventus Class B common stock;

 

   

“Bioventus LLC agreement” refers to the Second Amended and Restated Limited Liability Company Agreement of Bioventus LLC dated as of February 16, 2021;

 

   

“Bioventus record date” refers to September 22, 2021;

 

   

“Bioventus share issuance proposal” refers to the proposal to approve the issuance of shares of Bioventus common stock to Misonix stockholders in connection with the mergers;


Table of Contents
   

“Bioventus special meeting” refers to the special meeting of Bioventus stockholders to consider and vote upon the Bioventus share issuance proposal and the Bioventus adjournment proposal;

 

   

“BV LLC” refers to Bioventus LLC, a subsidiary of Bioventus Inc.;

 

   

“cash election consideration” refers to an amount of cash equal to $28.00, without interest, which reflects the amount of cash that Misonix stockholders will be entitled to receive in the first merger for each share of Misonix common stock held immediately prior to the effective time, if such stockholder elects the cash election consideration and subject to proration under the terms of the merger agreement;

 

   

“Code” refers to the Internal Revenue Code of 1986, as amended;

 

   

“combined company” refers to Bioventus immediately following the completion of the merger and the other transactions contemplated by the merger agreement;

 

   

“DGCL” refers to the General Corporation Law of the State of Delaware;

 

   

“DLLCA” refers to the Limited Liability Company Act of the State of Delaware;

 

   

“effective time” refers to the date and time when the first merger becomes effective under the DGCL, which will be the date and time at which the certificate of merger with respect to the first merger is filed with the Secretary of State of the State of Delaware, or such later date and time as may be mutually agreed to in writing by Bioventus and Misonix and specified in such certificate of merger;

 

   

“end date” refers to January 31, 2022, the date on which, subject to certain limitations in the merger agreement, the merger agreement may be terminated and the merger abandoned by either Bioventus or Misonix (which date will be automatically extended in certain circumstances related to the receipt of required regulatory approvals or the absence of restraints under certain competition laws to March 31, 2022, pursuant to the terms of the merger agreement);

 

   

“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

 

   

“first merger” refers to the merger of Merger Sub I with and into Misonix;

 

   

“former LLC owners” refers to certain members of BV LLC;

 

   

“GAAP” refers to U.S. generally accepted accounting principles;

 

   

“HSR Act” refers to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;

 

   

“J.P Morgan” refers to J.P. Morgan Securities LLC, financial advisor to Misonix in connection with the proposed mergers;

 

   

“LLC interests” refers to single class of common membership interests in BV LLC;

 

   

“mergers” refers to the first merger and the second merger;

 

   

“merger agreement” refers to the Agreement and Plan of Merger, dated July 29, 2021, as it may be amended from time to time, by and among Bioventus, Merger Sub I, Merger Sub II and Misonix;

 

   

“merger consideration” refers to the aggregate cash election consideration and stock election consideration;

 

   

“Merger Sub I” refers to Oyster Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of Bioventus, formed for the purpose of effecting the first merger as described in this joint proxy statement/prospectus;

 

   

“Merger Sub II” refers to Oyster Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of Bioventus, formed for the purpose of effecting the second merger as described in this joint proxy statement/prospectus;

 

   

“Misonix” refers to Misonix, Inc., a Delaware corporation;

 

   

“Misonix adjournment proposal” refers to the proposal to approve the adjournment of the Misonix special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes


Table of Contents
 

at the time of the Misonix special meeting to approve the Misonix merger proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Misonix stockholders;

 

   

“Misonix board” refers to the board of directors of Misonix;

 

   

“Misonix common stock” refers to the common stock, par value $0.0001 per share, of Misonix;

 

   

“Misonix compensation proposal” refers to the proposal to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Misonix named executive officers that is based on or otherwise relates to the transactions contemplated by the merger agreement;

 

   

“Misonix merger proposal” refers to the proposal to adopt the merger agreement;

 

   

“Misonix record date” refers to September 22, 2021;

 

   

“Misonix special meeting” refers to the special meeting of Misonix stockholders to consider and vote upon the Misonix merger proposal and related matters;

 

   

“Nasdaq” refers to the Nasdaq Global Select Market;

 

   

“original LLC owners” refers to the holders of BV LLC membership interests prior to the execution of the Bioventus LLC agreement;

 

   

“Perella Weinberg” refers to Perella Weinberg Partners L.P., financial advisor to Bioventus in connection with the proposed mergers;

 

   

“SEC” refers to the U.S. Securities and Exchange Commission;

 

   

“second effective time” refers to the date and time when the second merger becomes effective under the DGCL, which will be the date and time at which the certificate of merger with respect to the second merger is filed with the Secretary of State of the State of Delaware, or such later date and time as may be mutually agreed to in writing by Bioventus and Misonix and specified in such certificate of merger;

 

   

“second merger” refers to the merger of Misonix with and into Merger Sub II;

 

   

“Securities Act” refers to the Securities Act of 1933, as amended;

 

   

“share issuance” refers to the issuance of shares of Bioventus class A common stock to Misonix stockholders in connection with the merger;

 

   

“stock election consideration” refers to 1.6839 validly issued, fully paid and non-assessable shares of Bioventus class A common stock, which figure reflects the number of shares of Bioventus class A common stock that Misonix stockholders will be entitled to receive in the first merger for each share of Misonix common stock held immediately prior to the effective time if such stockholder elects the stock election consideration;

 

   

“stockholders agreement” refers to Stockholders Agreement, dated February 16, 2021, by and among Bioventus Inc., Bioventus LLC and the principal stockholders named therein;

 

   

“TRA” refers to the Tax Receivable Agreement, dated as of February 16, 2021, by and among Bioventus Inc., Bioventus LLC and the continuing LLC owner; and

 

   

“transaction” refers to the transactions contemplated by the merger agreement including the mergers.


Table of Contents

TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS

     1  

SUMMARY

     19  

MARKET PRICE AND DIVIDEND INFORMATION

     36  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     37  

RISK FACTORS

     39  

THE PARTIES TO THE MERGER

     117  

THE BIOVENTUS SPECIAL MEETING

     119  

BIOVENTUS PROPOSAL 1: APPROVAL OF THE SHARE ISSUANCE

     126  

BIOVENTUS PROPOSAL 2: ADJOURNMENT OF THE BIOVENTUS SPECIAL MEETING

     127  

THE MISONIX SPECIAL MEETING

     128  

MISONIX PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

     134  

MISONIX PROPOSAL 2: ADVISORY NON-BINDING VOTE ON MERGER-RELATED COMPENSATION FOR NAMED EXECUTIVE OFFICERS

     135  

MISONIX PROPOSAL 3: ADJOURNMENT OF THE MISONIX SPECIAL MEETING

     136  

THE MERGER

     137  

THE MERGER AGREEMENT

     198  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     230  

DESCRIPTION OF BIOVENTUS’ BUSINESS

     246  

BIOVENTUS’ MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     294  

BIOVENTUS DIRECTOR AND OFFICER COMPENSATION

     326  

SECURITIES AUTHORIZED FOR ISSUANCE UNDER BIOVENTUS’ EQUITY COMPENSATION PLANS

     336  

INTERESTS OF BIOVENTUS DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER

     337  

INTERESTS OF MISONIX DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGERS

     338  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE FIRST MERGER AND THE SECOND MERGER

     343  

COMPARISON OF STOCKHOLDERS’ RIGHTS

     351  

APPRAISAL RIGHTS

     361  

LEGAL MATTERS

     367  

EXPERTS

     368  

CERTAIN BENEFICIAL OWNERS OF BIOVENTUS COMMON STOCK

     369  

CERTAIN BENEFICIAL OWNERS OF MISONIX COMMON STOCK

     372  

STOCKHOLDER PROPOSALS

     374  

HOUSEHOLDING OF PROXY MATERIALS

     375  

WHERE YOU CAN FIND MORE INFORMATION

     376  


Table of Contents

INDEX TO BIOVENTUS INC. FINANCIAL STATEMENTS

  

Annex A—Merger Agreement

     A-1  

Annex B—Opinion of Perella Weinberg Partners L.P.

     B-1  

Annex C—Opinion of J.P. Morgan Securities LLC

     C-1  

Annex D—Appraisal Rights

     D-1  


Table of Contents

QUESTIONS AND ANSWERS

The following are brief answers to certain questions that you, as a Bioventus stockholder or Misonix stockholder, may have regarding the mergers and the other matters being considered at the Bioventus and Misonix special meetings, as applicable. You are urged to carefully read this joint proxy statement/prospectus and the other documents referred to in this joint proxy statement/prospectus in their entirety because this section may not provide all the information that is important to you regarding these matters. See “Summary” for a summary of important information regarding the merger agreement, the mergers and the related transactions. Additional important information is contained in the annexes to, and the documents incorporated by reference in, this joint proxy statement/prospectus. You may obtain the information incorporated by reference in this joint proxy statement/prospectus, without charge, by following the instructions under “Where You Can Find More Information.”

Why am I receiving this joint proxy statement/prospectus?

You are receiving this joint proxy statement/prospectus because Misonix has agreed to be acquired by Bioventus through a merger of Merger Sub I with and into Misonix with Misonix continuing as the surviving corporation, and immediately following, a merger of Misonix with and into Merger Sub II, with Merger Sub II continuing as the surviving entity in the merger and a wholly owned subsidiary of Bioventus. The merger agreement, which governs the terms and conditions of the mergers, is attached as Annex A hereto.

Your vote is required in connection with the mergers. Bioventus and Misonix are sending these materials to their respective stockholders to help them decide how to vote their shares at the Bioventus special meeting and Misonix special meeting.

What matters am I being asked to vote on?

In order to complete the mergers, among other things:

 

   

Bioventus stockholders must approve the Bioventus share issuance proposal; and

 

   

Misonix stockholders must approve the Misonix merger proposal.

Bioventus: Bioventus is holding the Bioventus special meeting to obtain approval of the Bioventus share issuance proposal and the Bioventus adjournment proposal.

Misonix: Misonix is holding the Misonix special meeting to obtain approval of the Misonix merger proposal. At the Misonix special meeting, Misonix stockholders will also be asked to consider and vote on the Misonix compensation proposal and the Misonix adjournment proposal.

Your vote is very important, regardless of the number of shares that you own. The approval of the Bioventus share issuance proposal and the Misonix merger proposal are conditions to the obligations of Bioventus and Misonix to complete the mergers. The approval of the Bioventus adjournment proposal, the Misonix compensation proposal and the Misonix adjournment proposal are not conditions to the obligations of Bioventus or Misonix to complete the mergers.

When and where will each of the special meetings take place?

Bioventus: The Bioventus special meeting will be held solely virtually via live webcast on October 26, 2021, beginning at 11:00 a.m., Eastern Time. Bioventus stockholders will be able to virtually attend and vote at the Bioventus special meeting by visiting www.virtualshareholdermeeting.com/BVS2021SM, which is referred to as the “Bioventus special meeting website.” In order to virtually attend and vote at the Bioventus special meeting, you will need the 16-digit control number located on your proxy card. Bioventus has retained Broadridge Financial Solutions,

 

1


Table of Contents

which is referred to as “Broadridge,” to host the live webcast of the Bioventus special meeting. Thirty minutes prior to the Bioventus special meeting, Broadridge may be contacted at (855) 499-0991 (U.S. toll-free) or (720) 378-5962 (international toll), and will be available to answer any questions regarding how to virtually attend the Bioventus special meeting or if you encounter any technical difficulty accessing or during the Bioventus special meeting. Technical support phone numbers will also be available via the virtual meeting url 30 minutes prior to the start of the meeting. See “The Bioventus Special Meeting—Virtually Attending the Bioventus Special Meeting.”

Misonix: The Misonix special meeting will be held at Misonix’s corporate offices, located at 1938 New Highway, Farmingdale, NY 11735 on October 26, 2021, beginning at 10:00 a.m., Eastern Time. As part of Misonix’s precautions regarding the novel coronavirus or COVID-19, Misonix is planning for the possibility that the meeting may be held solely by means of remote communications. If Misonix takes this step, Misonix will announce the decision to do so in advance, and details on how to participate, including details on how to inspect a list of stockholders of record, will be posted on our website at www.misonix.com and filed with the SEC as proxy material.

Even if you plan to attend your respective company’s special meeting, Bioventus and Misonix recommend that you vote by proxy in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the applicable special meeting.

If you hold your shares in “street name,” you may attend and vote at your respective company’s special meeting only if you obtain a specific control number from your bank, broker or other nominee giving you the right to vote such shares.

Does my vote matter?

Yes, your vote is very important, regardless of the number of shares that you own. The mergers cannot be completed unless the Bioventus share issuance proposal is approved by Bioventus stockholders and the Misonix merger proposal is approved by Misonix stockholders.

Bioventus

 

   

Bioventus Share Issuance Proposal. Assuming a quorum is present at the Bioventus special meeting, approval of the Bioventus share issuance proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast on the Bioventus share issuance proposal. Accordingly, any shares not virtually present or represented by proxy (including due to the failure of a Bioventus stockholder who holds shares of Bioventus common stock in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Bioventus share issuance proposal. An abstention, or other failure of any shares of Bioventus common stock virtually present or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus share issuance proposal to vote on the Bioventus share issuance proposal, will have the same effect as a vote “AGAINST” the Bioventus share issuance proposal. However, assuming a quorum is present at the Bioventus special meeting, if a Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Bioventus share issuance proposal, voting power will deemed to be withheld with respect to the Bioventus share issuance proposal and such failure to provide voting instructions will have no effect on the Bioventus share issuance proposal.

 

   

Bioventus Adjournment Proposal. Whether or not a quorum is present at the Bioventus special meeting, approval of the Bioventus adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast on the Bioventus adjournment proposal. Accordingly, any shares not virtually present or represented by proxy (including due to the failure of an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the

 

2


Table of Contents
 

Bioventus adjournment proposal. An abstention or other failure of any shares of Bioventus common stock virtually present or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus adjournment proposal to vote on the Bioventus adjournment proposal, will have the same effect as a vote “AGAINST” the Bioventus adjournment proposal. However, if a Bioventus stockholder who holds shares of Bioventus common stock in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Bioventus adjournment proposal, voting power will deemed to be withheld with respect to the Bioventus adjournment proposal and such failure to provide voting instructions will have no effect on the Bioventus adjournment proposal.

Misonix

 

   

Misonix merger proposal. Assuming a quorum is present at the Misonix special meeting, approval of the Misonix merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Misonix common stock. For the Misonix compensation proposal, a Misonix stockholder may indicate “FOR,” “AGAINST” or “ABSTAIN” on the proxy card. Brokerage firms and nominees will not have the authority to vote their customers’ unvoted shares on the Misonix merger proposal or to vote their customers’ shares if the customers have not furnished voting instructions within a specified period of time prior to the Misonix special meeting. Any shares not present or represented by proxy (including due to the failure of a Misonix stockholder who holds shares of Misonix common stock in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) and any abstention, or other failure of any shares of Misonix common stock present or represented by proxy and entitled to vote at the Misonix special meeting on the Misonix merger proposal to vote on the Misonix merger proposal, will each have the same effect as a vote “AGAINST” the Misonix merger proposal.

 

   

Misonix compensation proposal. Assuming a quorum is present at the Misonix special meeting, approval of the Misonix compensation proposal requires the affirmative vote of the holders of a majority of the votes cast on the Misonix compensation proposal by holders of Misonix common stock present or represented by proxy at the Misonix special meeting. For the Misonix compensation proposal, a Misonix stockholder may indicate “FOR,” “AGAINST” or “ABSTAIN” on the proxy card. For purposes of determining the number of votes cast with respect to the Misonix compensation proposal, only those votes cast “FOR” or “AGAINST” are included. Brokerage firms and nominees will not have the authority to vote their customers’ unvoted shares on the Misonix compensation proposal or to vote their customers’ shares if the customers have not furnished voting instructions within a specified period of time prior to the Misonix special meeting. Abstentions and broker non-votes are counted only for purposes of determining whether a quorum is present at the meeting and therefore will have no effect on the outcome of the vote for the Misonix compensation proposal. Approval of the Misonix compensation proposal is not a condition to completion of the mergers, and the vote with respect to this proposal is advisory only and will not be binding on Misonix, the surviving corporation, the surviving company or Bioventus. If the mergers are completed, the transactions-related executive compensation may be paid to Misonix’s named executive officers to the extent payable in accordance with the terms of the compensation arrangements even if Misonix stockholders fail to approve, by non-binding, advisory vote, the Misonix compensation proposal.

 

   

Misonix adjournment proposal. Whether or not a quorum is present at the Misonix special meeting, approval of the Misonix adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the shares of Misonix common stock present or represented by proxy at the Misonix special meeting. Accordingly, any shares not present or represented by proxy (including due to the failure of a Misonix stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Misonix adjournment proposal. An abstention, or other failure of any shares of Misonix common stock present or represented by proxy and entitled to vote at the Misonix special

 

3


Table of Contents
 

meeting on the Misonix adjournment proposal to vote on the Misonix adjournment proposal, will have the same effect as a vote “AGAINST” the Misonix adjournment proposal. However, if a Misonix stockholder who holds shares of Misonix common stock in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Misonix adjournment proposal, voting power will deemed to be withheld with respect to the Misonix adjournment proposal and such failure to provide voting instructions will have no effect on the Misonix adjournment proposal.

What will Misonix stockholders receive for their shares of Misonix common stock if the mergers are completed?

If the mergers are completed, each issued and outstanding share of Misonix common stock (other than treasury shares of Misonix, shares held by a subsidiary of Misonix, Bioventus, Merger Sub I or Merger Sub II, and shares held by Misonix stockholders who have not voted in favor of the Misonix merger proposal and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be converted into the right to receive either an amount in cash equal to $28.00 or 1.6839 validly issued, fully paid and non-assessable shares of Bioventus class A common stock, based on the election of the holder thereof and, in each case, subject to automatic proration and adjustment in accordance with the terms of the merger agreement, as described under “The Merger Agreement—The Mergers; Merger Consideration—Proration and Reallocation”

What is the value of the merger consideration payable to holders of Misonix common stock?

The exchange ratio of 1.6839 shares of Bioventus class A common stock is fixed and will not be adjusted for changes in the market price of either Bioventus class A common stock or Misonix common stock between the date of signing of the merger agreement and the completion date of the first merger. As such, the market value of the merger consideration payable to Misonix stockholders will fluctuate with the market price of the Bioventus class A common stock and will not be known at the time that Misonix stockholders vote on the Misonix merger proposal. Upon completion of the mergers, former Misonix stockholders are expected to own approximately 25% of the outstanding shares of Bioventus common stock and Bioventus stockholders immediately prior to the mergers are expected to own approximately 75% of the outstanding shares of Bioventus common stock. Bioventus class A common stock is traded on the Nasdaq Global Select Market, which is referred to as “Nasdaq,” under the symbol “BVS.” Misonix common stock is traded on Nasdaq under the symbol “MSON.” We encourage you to obtain current quotes for both the Bioventus class A common stock and the Misonix common stock before voting at the Misonix special meeting.

While the value of merger consideration to be received by a specific holder of Misonix common stock will depend on whether they elect to receive the cash consideration, elect to receive the stock consideration, or make no election, if all Misonix stockholders elect to receive the cash consideration (or if all Misonix stockholders elect to receive the stock consideration), each holder of Misonix common stock would receive, on an aggregate basis, $10.50 in cash and 1.0524 shares of Bioventus class A common stock for each share of Misonix common stock that they own. Based on the Bioventus class A common stock price of $16.63 per share, which is the average of the daily volume weighted average price per share for the seven consecutive trading day period up to and including July 27, 2021, two trading days prior to the entry by Bioventus and Misonix into the merger agreement, the implied value of the merger consideration to Misonix stockholders (assuming all Misonix stockholders elect to receive the cash consideration or all Misonix stockholders elect to receive the stock consideration), was $28.00 per share of Misonix common stock. On September 1, 2021, the latest practicable trading day before the date of the filing of this joint proxy statement/prospectus, the closing price of Bioventus class A common stock on the Nasdaq was $14.98 per share, resulting in the implied value of the merger consideration to Misonix stockholders (assuming all Misonix stockholders elect to receive the cash consideration or all Misonix stockholders elect to receive the stock consideration), was $26.27 per share of Misonix common stock.

 

4


Table of Contents

How do I elect the type of merger consideration I prefer to receive?

Not less than 30 days prior to the anticipated closing date of the first merger, letter of election and transmittal will be mailed to each Misonix stockholder that is a holder of record as of five business days prior to the mailing date. To elect to receive the cash consideration, the stock consideration or a combination of the two, you must indicate on the letter of election and transmittal the number of shares of Misonix common stock with respect to which you elect to receive the cash consideration, the number of shares of Misonix common stock with respect to which you elect to receive the stock consideration and the number of shares of Misonix common stock with respect to which you make no election. Misonix intends to issue a press release at least five business days prior to the expiration of the election period informing Misonix, stockholders of the expiration of the election period, which expiration we refer to as the “election deadline.” You must return the letter of election and transmittal in the pre-addressed, return envelope provided so that it is received no later than 5:00 p.m. (New York City time) on the election deadline for your election to be properly submitted.

If you hold shares of Misonix common stock in “street name”, you should receive instructions from the bank, brokerage firm or other nominee that is holding your shares advising you of the procedures for making your election. If these instructions are not received, you should contact the bank, brokerage firm or other nominee holding your shares of Misonix common stock as soon as possible. Election forms must be returned to the broker, bank or nominee in time for it to respond prior to the election deadline, therefore, you are encouraged to pay close attention to, and abide by, any election deadlines provided by the bank, brokerage firm or other nominee holding your shares, as that deadline may be earlier than the election deadline described in this joint proxy statement/prospectus.

Can I make one election for some of my shares of Misonix common stock and another election for the rest?

Yes. The letter of election and transmittal permits you to specify, among the shares of Misonix common stock you hold, (i) the number of shares of Misonix common stock for which you are electing to receive the cash consideration of $28.00 per share, (ii) the number of shares of Misonix common stock for which you are electing to receive the stock consideration of 1.6839 shares of Bioventus class A common stock, or (iii) the number of shares of Misonix common stock for which you make no election.

What if I do not make an election or my letter of election and transmittal is not received before the election deadline?

If you do not submit a properly completed and signed letter of election and transmittal to the exchange agent by the election deadline (or if you submit a properly completed letter of election and transmittal indicating no election), then you will be deemed to have made no election and will therefore receive the cash consideration or the stock consideration or a combination of both, depending on the elections made by other Misonix stockholders (as described in the section entitled “The Merger Agreement—The Mergers; Effects of the Mergers—Proration and Reallocation” of this joint proxy statement/prospectus), except with respect to shares as to which you have not voted in favor of the Misonix merger proposal and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law.

For Misonix share certificates and Misonix book-entry shares not held through DTC, Misonix stockholders should complete and return the letter of election and transmittal to the exchange agent even if the stockholder is making no election because the exchange agent will require your transmittal information requested in the letter. Stockholders who do not return a letter of election and transmittal to the exchange agent prior to the election deadline will be mailed a letter of transmittal from the exchange agent following the consummation of the merger.

Can I change my election after I submit a letter of election and transmittal?

Yes. You may revoke your election of the form of merger consideration you will receive with respect to all or a portion of your shares of Misonix common stock by delivering written notice of your revocation to the exchange

 

5


Table of Contents

agent prior to the election deadline. If you instructed a bank, brokerage firm or other nominee to submit an election for your shares, you must follow its directions for changing those instructions, as the deadline to revoke your election may be earlier than the election deadline described in this joint proxy statement/prospectus. In addition, any election of merger consideration you make will automatically be revoked if the merger agreement is terminated.

Misonix stockholders will not be entitled to revoke or change their election following the election deadline. For Misonix stockholders who hold shares in “street name”, the election deadline provided by the bank, brokerage firm or other nominee holding your shares may be earlier than the election deadline described in this joint proxy statement/prospectus. As a result, if you make an election, you will be unable to revoke your election or sell your shares of Misonix common stock after the applicable election deadline unless the merger agreement is terminated.

May I submit a letter of election and transmittal even if I vote against the Misonix merger proposal?

Yes. You should submit a letter of election and transmittal even if you vote against the Misonix merger proposal.

May I transfer my shares of Misonix common stock once I have made an election?

Yes you may transfer your shares prior to the election deadline, however, for Misonix stockholders who have made an election, any further transfer of shares made on the stock transfer books of Misonix will be deemed to be a revocation of their election. Furthermore, you will not be able to transfer your shares of Misonix common stock after the election deadline unless the merger agreement is terminated.

What happens if I am eligible to receive a fraction of a share of Bioventus class A common stock as part of the merger consideration?

If the aggregate number of shares of Bioventus class A common stock, if any, that you are entitled to receive as merger consideration includes a fraction of a share of Bioventus class A common stock, you will receive cash in lieu of that fractional share. See the section entitled “The Merger Agreement—Fractional Shares” of this joint proxy statement/prospectus.

What will holders of Misonix equity compensation awards receive in the mergers?

Each outstanding Misonix stock option held by employees and directors of Misonix who meet the S-8 definition of “employee” shall (i) become fully vested immediately upon the effective time and (ii) be assumed by Bioventus and converted automatically into an option to purchase Bioventus Class A Common Stock based on the option exchange ratio (with the exercise price with respect to such option being adjusted based on the option exchange ratio). Aside from the foregoing adjustments, the assumed options will generally remain subject to the same vesting and other terms and conditions that applied to such awards immediately prior to the effective time.

Each outstanding Misonix stock option held by an individual who does not meet the S-8 definition of “employee” will become fully vested and be settled in cash immediately prior to the effective time in an amount equal to the product of (x) the number of shares of Misonix common stock subject to the applicable option and (y) the excess, if any, of (i) the average of the volume-weighted average trading price per share of Bioventus Class A Common Stock on Nasdaq (as reported by Bloomberg L.P.) on each of the five consecutive trading days ending on (and including) the trading day that is three trading days prior to the date of the effective time over (ii) the per share exercise price of such option.

See the section entitled “The Merger Agreement—Treatment of Misonix Equity Awards” of this joint proxy statement/prospectus.

 

6


Table of Contents

How will the mergers be financed?

Bioventus expects to fund the aggregate cash consideration upon completion of the mergers with cash on hand, together with the proceeds of senior secured term loans in an aggregate principal amount of approximately $262.0 to be incurred initially by Merger Sub I. The receipt of financing by Bioventus is not a condition to completion of the mergers and, accordingly, Bioventus will be required to complete the mergers (assuming that all of the conditions to its obligations under the merger agreement are satisfied) whether or not debt financing is available at all or on acceptable terms. See the section entitled “Financing of the Mergers” of this joint proxy statement/prospectus.

How does the Bioventus board recommend that I vote at the Bioventus special meeting?

The Bioventus board unanimously recommends that you vote “FOR” the Bioventus share issuance proposal and “FOR” the Bioventus adjournment proposal.

Other than with respect to continued service for, employment by and the right to continued indemnification by the combined company, as of the date of this joint proxy statement/prospectus, Bioventus directors and executive officers do not have interests in the merger that are different from, or in addition to, the interests of other Bioventus stockholders generally. See “Interests of Bioventus Directors and Executive Officers in the Merger.”

How does the Misonix board recommend that I vote at the Misonix special meeting?

The Misonix board unanimously recommends that you vote “FOR” the Misonix merger proposal, “FOR” the Misonix compensation proposal and “FOR” the Misonix adjournment proposal. For a description of some of the factors considered by the Misonix board in reaching its decision to approve the merger agreement and the transactions contemplated thereby, including the merger, and additional information on the recommendation of the Misonix board, see “The Merger—Recommendation of the Misonix Board of Directors; Misonix’s Reasons for the Merger.”

Who is entitled to vote at each special meeting?

Bioventus

All holders of record of shares of Bioventus common stock who held shares at the close of business on September 22, 2021 (the Bioventus record date) are entitled to receive notice of, and to vote at, the Bioventus special meeting. Each such holder of Bioventus common stock is entitled to cast one vote on each matter properly brought before the Bioventus special meeting for each share of Bioventus common stock that such holder owned of record as of the Bioventus record date. Virtual attendance at the Bioventus special meeting via the Bioventus special meeting website is not required to vote. See below and “The Bioventus Special Meeting—Methods of Voting” for instructions on how to vote without virtually attending the Bioventus special meeting.

Misonix

All holders of record of shares of Misonix common stock who held shares at the close of business on September 22, 2021 (the Misonix record date) are entitled to receive notice of, and to vote at, the Misonix special meeting. Each such holder of Misonix common stock is entitled to cast one vote on each matter properly brought before the Misonix special meeting for each share of Misonix common stock that such holder owned of record as of the Misonix record date. Physical attendance at the Misonix special meeting is not required to vote. See below and “The Misonix Special Meeting—Methods of Voting” for instructions on how to vote without attending the Misonix special meeting.

 

7


Table of Contents

What is a proxy?

A proxy is a stockholder’s legal designation of another person to vote shares owned by such stockholder on their behalf. The document used to designate a proxy to vote your shares of Bioventus or Misonix common stock, as applicable, is referred to as a “proxy card.”

How many votes do I have at each special meeting?

Bioventus

Each Bioventus stockholder is entitled to one vote for each share of Bioventus common stock held of record as of the close of business on the Bioventus record date. As of the close of business on the Bioventus record date, there were 56,849,338 shares of Bioventus common stock outstanding.

Misonix

Each Misonix stockholder is entitled to one vote for each share of Misonix common stock held of record as of the close of business on the Misonix record date. As of the close of business on the Misonix record date, there were 17,425,045 shares of Misonix common stock outstanding.

What constitutes a quorum for each special meeting?

Bioventus

A quorum is the minimum number of shares required to be represented, either through virtual attendance or through representation by proxy, to hold a valid meeting.

The holders of a majority of in voting power of the stock issued and outstanding and entitled to vote at the meeting, must be present in person, or by remote communication, if applicable, or represented by proxy to constitute a quorum.

Misonix

The holders of a majority in voting power of the shares of stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, will constitute a quorum.

Where will the Bioventus common stock that I receive in the merger be publicly traded?

The shares of Bioventus class A common stock to be issued to Misonix stockholders in the merger will be listed for trading on Nasdaq under the symbol “BVS.”

What happens if the merger is not completed?

If the Bioventus share issuance proposal is not approved by Bioventus stockholders, if the Misonix merger proposal is not approved by Misonix stockholders or if the mergers are not completed for any other reason, Misonix stockholders will not receive the merger consideration or any other consideration in connection with the mergers, and their shares of Misonix common stock will remain outstanding.

If the mergers are not completed, Misonix will remain an independent public company, the Misonix common stock will continue to be listed and traded on Nasdaq under the symbol “MSON” and Bioventus will not complete the share issuance contemplated by the merger agreement, regardless of whether the Bioventus share issuance proposal has been approved by Bioventus stockholders.

 

8


Table of Contents

Under the merger agreement, Bioventus and Misonix will each be required to pay a termination fee of $20,661,000 to the other party if the merger agreement is terminated in certain circumstances, including if the respective party’s board changes its recommendation in connection with the mergers and the other party terminates the merger agreement. Additionally, Misonix may terminate the merger agreement if it enters into an alternative acquisition agreement with respect to a superior proposal and pays Bioventus the termination fee. See “The Merger Agreement—Termination Fee.”

How can I vote my shares at my respective special meeting?

Bioventus

Shares held directly in your name as a Bioventus stockholder of record may be virtually voted at the Bioventus special meeting via the Bioventus special meeting website. You will need the 16-digit control number included on your proxy card in order to access and vote via the Bioventus special meeting website as described under “The Bioventus Special Meeting—Virtually Attending the Bioventus Special Meeting.”

Shares held in “street name” may be virtually voted at the Bioventus special meeting via the Bioventus special meeting website only if you obtain a specific control number and follow the instructions provided by your bank, broker or other nominee. See “The Bioventus Special Meeting—Virtually Attending the Bioventus Special Meeting.”

Misonix

You may vote by attending the Misonix special meeting and voting in person or by submitting a proxy. The method of voting by proxy differs (i) depending on whether you are viewing this proxy statement on the Internet or submitting a paper copy and (ii) for shares of Misonix common stock held as a record holder and shares held in “street name.”

If you hold your shares of Misonix common stock as a record holder and you are viewing this joint proxy statement/prospectus on the Internet, you may submit a proxy over the Internet by following the instructions on the proxy card that was included with this joint proxy statement/prospectus. If you hold your shares of Misonix common stock as a record holder and you are reviewing a paper copy of this joint proxy statement/prospectus, you may submit a proxy over the Internet or by telephone by following the instructions on the proxy card, or by completing, dating and signing the proxy card that was included with this joint proxy statement/prospectus and promptly returning it in the pre-addressed, postage-paid envelope provided to you.

“Street name” holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares using the methods described below. If you hold your shares of Misonix common stock in street name, you will receive a notice from your broker, bank, trust or other nominee that includes instructions on how to vote your shares. Your broker, bank, trust or other nominee may allow you to deliver your voting instructions over the Internet and may also permit you to submit your voting instructions by telephone. In addition, you may request paper copies of this proxy statement and accompanying proxy card from your broker by following the instructions on the notice provided by your broker, bank, trust or other nominee.

For additional information on virtually attending the special meetings, see “The Bioventus Special Meeting” and “The Misonix Special Meeting.”

How can I vote my shares without attending my company’s special meeting?

Whether you hold your shares directly as a stockholder of record of Bioventus or Misonix or beneficially in “street name,” you may direct your vote by proxy without attending the Bioventus or Misonix special meeting, as applicable. If you are a stockholder of record, you can vote by proxy over the internet, by telephone or by mail by

 

9


Table of Contents

following the instructions provided in the enclosed proxy card. If you hold shares beneficially in “street name,” you should follow the voting instructions provided by your bank, broker or other nominee.

For additional information on voting procedures, see “The Bioventus Special Meeting” and “The Misonix Special Meeting.”

What is a “broker non-vote”?

Under Nasdaq rules, banks, brokers and other nominees may use their discretion to vote “uninstructed” shares (i.e., shares of record held by banks, brokers or other nominees, but with respect to which the beneficial owner of such shares has not provided instructions on how to vote on a particular proposal) with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. All of the proposals currently expected to be brought before the Bioventus and Misonix special meetings are “non-routine” matters under Nasdaq rules.

A “broker non-vote” occurs on an item when (i) a bank, broker or other nominee has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other proposals without instructions from the beneficial owner of the shares, and (ii) the beneficial owner fails to provide the bank, broker or other nominee with such instructions. Because all of the proposals currently expected to be voted on at the Bioventus and Misonix special meetings are non-routine matters under Nasdaq rules for which brokers do not have discretionary authority to vote, Bioventus and Misonix do not expect there to be any broker non-votes at the Bioventus or Misonix special meetings.

Are there any Misonix stockholders already committed to vote in favor of the Misonix merger proposal and Misonix compensation proposal? Are there any Bioventus stockholders already committed to vote in favor of the Bioventus share issuance proposal?

Bioventus: Yes. Subsequent to the execution of the merger agreement, Misonix entered into a voting agreement (the “Bioventus support agreement”) with EW Healthcare Partners Acquisition Fund, L.P., White Pine Medical, LLC (a subsidiary of EW Partners Acquisition Fund, L.P.), Smith & Nephew, Inc., Smith & Nephew USD Ltd and AMP-CF Holdings, LLC (together, the “Bioventus supporting stockholders”), pursuant to which such stockholders have agreed, among other things, to vote the shares of Bioventus common stock that they beneficially own at the time such vote is taken in favor of Bioventus share issuance proposal and against approval of any proposal made in opposition to, in competition with, or inconsistent with, the merger agreement or the transaction. As of the record date for the Bioventus special meeting, such stockholders beneficially own approximately 67.4% of the outstanding shares of Bioventus common stock. Therefore, the Bioventus supporting stockholders hold a sufficient number of shares of Bioventus common stock in order to approve the Bioventus share issuance proposal. On July 29, 2021, in connection with execution of the merger agreement, each of the Bioventus supporting stockholders have entered into lock up agreements with Bioventus (each a “lock up agreement”) restricting the sale and transfer of the capital stock of Bioventus for a period of 90 or 180 days, subject to the terms of the lock up agreement.

Misonix: Yes. Subsequent to the execution of the merger agreement, Bioventus entered into a voting agreement (the “Misonix support agreement”) with each of Stavros G. Vizirgianakis, 1315 Capital, LLC, SV Life Sciences Fund VI Strategic Partners, L.P. and SV Life Sciences Fund VI, L.P. (together, the “Misonix supporting stockholders”), pursuant to which such stockholders have agreed, among other things, to vote the shares of Misonix common stock that they own at the time such vote is taken in favor of the Misonix merger proposal and Misonix compensation proposal and against approval of any proposal made in opposition to, in competition with, or inconsistent with, the merger agreement or the transaction. As of the record date for the Misonix special meeting, the Misonix supporting stockholders beneficially own approximately 28.8% of the outstanding shares of Misonix common stock.

 

10


Table of Contents

What stockholder vote is required for the approval of each proposal at the Bioventus special meeting? What will happen if I fail to vote or abstain from voting on each proposal at the Bioventus special meeting?

Bioventus Proposal 1: Bioventus Share Issuance Proposal

Assuming a quorum is present at the Bioventus special meeting, approval of the Bioventus share issuance proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast on the Bioventus share issuance proposal. Accordingly, any shares not virtually present or represented by proxy (including due to the failure of an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Bioventus share issuance proposal. An abstention or other failure of any shares virtually present or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus share issuance proposal to vote on the Bioventus share issuance proposal will have the same effect as a vote “AGAINST” the Bioventus share issuance proposal. However, assuming a quorum is present at the Bioventus special meeting, if a Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Bioventus share issuance proposal, voting power will deemed to be withheld with respect to the Bioventus share issuance proposal and such failure to provide voting instructions will have no effect on the Bioventus share issuance proposal.

Bioventus Proposal 2: Bioventus Adjournment Proposal

Whether or not a quorum is present at the Bioventus special meeting, approval of the Bioventus adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast on the Bioventus adjournment proposal. Accordingly, any shares not virtually present or represented by proxy (including due to the failure of a Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Bioventus adjournment proposal. An abstention or other failure of any shares virtually present or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus adjournment proposal to vote on the Bioventus adjournment proposal will have the same effect as a vote “AGAINST” the Bioventus adjournment proposal. However, if a Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Bioventus adjournment proposal, voting power will deemed to be withheld with respect to the Bioventus adjournment proposal and such failure to provide voting instructions will have no effect on the Bioventus adjournment proposal.

What stockholder vote is required for the approval of each proposal at the Misonix special meeting? What will happen if I fail to vote or abstain from voting on each proposal at the Misonix special meeting?

Misonix Proposal 1: Misonix Merger Proposal

Assuming a quorum is present at the Misonix special meeting, approval of the Misonix merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Misonix common stock. For the Misonix compensation proposal, a Misonix stockholder may indicate “FOR,” “AGAINST” or “ABSTAIN” on the proxy card. Brokerage firms and nominees will not have the authority to vote their customers’ unvoted shares on the Misonix merger proposal or to vote their customers’ shares if the customers have not furnished voting instructions within a specified period of time prior to the Misonix special meeting. Any shares not present or represented by proxy (including due to the failure of a Misonix stockholder who holds shares of Misonix common stock in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) and any abstention, or other failure of any shares of Misonix common stock present or represented by proxy and entitled to vote at the Misonix special meeting on the Misonix merger proposal to vote on the Misonix merger proposal, will each have the same effect as a vote “AGAINST” the Misonix merger proposal.

 

11


Table of Contents

Misonix Proposal 2: Misonix Compensation Proposal

Assuming a quorum is present at the Misonix special meeting, approval of the Misonix compensation proposal requires the affirmative vote of the holders of a majority of the votes cast on the Misonix compensation proposal by holders of Misonix common stock present or represented by proxy at the Misonix special meeting. For the Misonix compensation proposal, a Misonix stockholder may indicate “FOR,” “AGAINST” or “ABSTAIN” on the proxy card. For purposes of determining the number of votes cast with respect to the Misonix compensation proposal, only those votes cast “FOR” or “AGAINST” are included. Brokerage firms and nominees will not have the authority to vote their customers’ unvoted shares on the Misonix compensation proposal or to vote their customers’ shares if the customers have not furnished voting instructions within a specified period of time prior to the Misonix special meeting. Abstentions and broker non-votes are counted only for purposes of determining whether a quorum is present at the meeting and therefore will have no effect on the outcome of the vote for the Misonix compensation proposal. Approval of the Misonix compensation proposal is not a condition to completion of the mergers, and the vote with respect to this proposal is advisory only and will not be binding on Misonix, the surviving corporation, the surviving company or Bioventus. If the mergers are completed, the transactions-related executive compensation may be paid to Misonix’s named executive officers to the extent payable in accordance with the terms of the compensation arrangements even if Misonix stockholders fail to approve, by non-binding, advisory vote, the Misonix compensation proposal.

Misonix Proposal 3: Misonix Adjournment Proposal

Whether or not a quorum is present at the Misonix special meeting, approval of the Misonix adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the shares of Misonix common stock present or represented by proxy at the Misonix special meeting. Accordingly, any shares not present or represented by proxy (including due to the failure of a Misonix stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Misonix adjournment proposal. An abstention, or other failure of any shares of Misonix common stock present or represented by proxy and entitled to vote at the Misonix special meeting on the Misonix adjournment proposal to vote on the Misonix adjournment proposal, will have the same effect as a vote “AGAINST” the Misonix adjournment proposal. However, if a Misonix stockholder who holds shares of Misonix common stock in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Misonix adjournment proposal, voting power will deemed to be withheld with respect to the Misonix adjournment proposal and such failure to provide voting instructions will have no effect on the Misonix adjournment proposal.

Why am I being asked to consider and vote on a proposal to approve, by non-binding advisory vote, the merger-related compensation for named executive officers (the Misonix compensation proposal)?

Under SEC rules, Misonix is required to seek a non-binding advisory vote of its stockholders relating to the compensation that may be paid or become payable to Misonix named executive officers that is based on or otherwise relates to the merger (also known as “golden parachute” compensation).

What happens if Misonix stockholders do not approve, by non-binding advisory vote, the merger-related compensation for Misonix named executive officers (the Misonix compensation proposal)?

Because the vote on the proposal to approve the Misonix compensation proposal is advisory in nature, the outcome of the vote will not be binding upon Misonix or the combined company. Accordingly, the merger-related compensation, which is described under “Interests of Misonix Directors and Executive Officers in the Merger,” may be paid to Misonix named executive officers even if Misonix stockholders do not approve the Misonix compensation proposal.

 

12


Table of Contents

What if I hold shares of both Bioventus and Misonix common stock?

If you are both a Bioventus stockholder and a Misonix stockholder, you will receive two separate packages of proxy materials. A vote cast as a Bioventus stockholder will not count as a vote cast as a Misonix stockholder, and a vote cast as a Misonix stockholder will not count as a vote cast as a Bioventus stockholder. Therefore, please follow the instructions received with each set of materials you receive in order to submit separate proxies for your shares of Bioventus common stock and your shares of Misonix common stock.

What is the difference between holding shares as a stockholder of record and as a beneficial owner of shares held in “street name”?

If your shares of Bioventus or Misonix common stock are registered directly in your name with the transfer agent of Bioventus and Misonix, respectively, you are considered the stockholder of record with respect to those shares. As the stockholder of record, you have the right to vote directly at the applicable special meeting. You may also grant a proxy directly to Bioventus or Misonix, as applicable, or to a third party to vote your shares at the applicable special meeting.

If your shares of Bioventus or Misonix common stock are held by a bank, broker or other nominee, you are considered the beneficial owner of shares held in “street name.” Your bank, broker or other nominee will send you, as the beneficial owner, a package describing the procedures for voting your shares. You should follow the instructions provided by them to vote your shares. In order to attend and vote at the Bioventus special meeting via the Bioventus special meeting website or the Misonix special meeting in person, you will need to obtain a specific control number and follow the other procedures provided by your bank, broker or other nominee.

If my shares of Bioventus or Misonix common stock are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote those shares for me?

No. Your bank, broker or other nominee will only be permitted to vote your shares of Bioventus or Misonix common stock, as applicable, if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee regarding the voting of your shares. Under Nasdaq rules, banks, brokers and other nominees who hold shares of Bioventus or Misonix common stock in “street name” for their customers have authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers and other nominees are prohibited from exercising their voting discretion with respect to non-routine matters, which include all the proposals currently scheduled to be considered and voted on at the Bioventus and Misonix special meetings. As a result, absent specific instructions from the beneficial owner of such shares, banks, brokers and other nominees are not empowered to vote such shares.

For Bioventus stockholders, the effect of not instructing your bank, broker or other nominee how you wish to vote your shares of Bioventus common stock will have no effect on the Bioventus share issuance proposal or the Bioventus adjournment proposal (assuming a quorum is present at the Bioventus special meeting).

For Misonix stockholders, the effect of not instructing your bank, broker or other nominee how you wish to vote your shares of Misonix common stock will be the same as a vote “AGAINST” the Misonix merger proposal, but will have no effect on the Misonix compensation proposal (assuming a quorum is present at the Misonix special meeting) or the Misonix adjournment proposal. In addition, if a Misonix stockholder who holds shares in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Misonix compensation proposal or the Misonix adjournment proposal, it will have the same effect as a vote “AGAINST” such proposal.

 

13


Table of Contents

What should I do if I receive more than one set of voting materials for the same special meeting?

If you hold shares of Bioventus or Misonix common stock in “street name” and also directly in your name as a stockholder of record or otherwise, or if you hold shares of Bioventus or Misonix common stock in more than one brokerage account, you may receive more than one set of voting materials relating to the same special meeting.

Record Holders. For shares held directly, please vote by proxy over the internet or telephone using the instructions included with the accompanying proxy card, or promptly complete your proxy card and return it in the enclosed postage-paid envelope, in order to ensure that all of your shares of Bioventus or Misonix common stock are voted.

Shares in “street name.” For shares held in “street name” through a bank, broker or other nominee, you should follow the procedures provided by your bank, broker or other nominee to submit a proxy or vote your shares.

If a stockholder gives a proxy, how are the shares of Bioventus or Misonix common stock voted?

Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your shares of Bioventus or Misonix common stock, as applicable, in the way that you indicate. For each item before the Bioventus or Misonix special meeting, as applicable, you may specify whether your shares of Bioventus or Misonix common stock, as applicable, should be voted for or against, or abstain from voting.

How will my shares of Bioventus common stock be voted if I return a blank proxy?

If you sign, date and return your proxy and do not indicate how you want your shares of Bioventus common stock to be voted, then your shares of Bioventus common stock will be voted in accordance with the recommendation of the Bioventus board: “FOR” the Bioventus share issuance proposal and “FOR” the Bioventus adjournment proposal.

How will my shares of Misonix common stock be voted if I return a blank proxy?

If you sign, date and return your proxy and do not indicate how you want your shares of Misonix common stock to be voted, then your shares of Misonix common stock will be voted in accordance with the recommendation of the Misonix board: “FOR” the Misonix merger proposal, “FOR” the Misonix compensation proposal and “FOR” the Misonix adjournment proposal.

Can I change my vote after I have submitted my proxy?

Any Bioventus or Misonix’s stockholder giving a proxy has the right to revoke the proxy and change their vote before the proxy is voted at the applicable special meeting by doing any of the following:

 

   

subsequently submitting a new proxy (including over the internet or telephone) for the applicable special meeting that is received by the deadline specified on the accompanying proxy card;

 

   

giving timely written notice of your revocation to Bioventus’ or Misonix’s Corporate Secretary, as applicable; or

 

   

attending and voting at the applicable special meeting.

 

14


Table of Contents

Execution or revocation of a proxy will not in any way affect your right to attend and vote at the applicable special meeting, whether in person or, in the case of the Bioventus special meeting, via the special meeting website. Written notices of revocation and other communications relating to the revocation of proxies should be addressed:

 

If you are an Bioventus stockholder:    If you are a Misonix stockholder:

Bioventus Inc.

4721 Emperor Boulevard, Suite 400

Durham, North Carolina 27703

Attention: Corporate Secretary

tony.dadamio@bioventus.com

(919) 474-6700

Bioventus Inc.

  

Misonix, Inc.

1938 New Highway

Farmingdale, NY 11735

Attention: Secretary

misonixproxy@misonix.com

(631) 694-9555

Misonix, Inc.

See “The Bioventus Special Meeting—Revocability of Proxies” and “The Misonix Special Meeting—Revocability of Proxies.”

If I hold my shares in “street name,” can I change my voting instructions after I have submitted voting instructions to my bank, broker or other nominee?

If your shares are held in the name of a bank, broker or other nominee and you previously provided voting instructions to your bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee to revoke or change your voting instructions.

Where can I find the voting results of the special meetings?

The preliminary voting results for each special meeting are expected to be announced at that special meeting. In addition, within four business days following certification of the final voting results, each of Bioventus and Misonix will file the final voting results of its respective special meeting (or, if the final voting results have not yet been certified, the preliminary results) with the SEC on a Current Report on Form 8-K.

Do Misonix stockholders have dissenters’ or appraisal rights?

Subject to the closing of the mergers, Misonix stockholders who do not vote in favor of the Misonix merger proposal and otherwise comply with the procedures and satisfy the conditions set forth in Section 262 of the DGCL are entitled to appraisal rights under Section 262 of the DGCL. For more information regarding appraisal rights, see the section entitled “Appraisal Rights,” In addition, a copy of Section 262 of the DGCL is attached as Annex D to this joint proxy statement/prospectus. Failure to strictly comply with Section 262 of the DGCL may result in your waiver of, or inability to, exercise appraisal rights.

Are there any risks that I should consider in deciding whether to vote for the approval of the Bioventus share issuance proposal or the Misonix merger proposal?

Yes. You should read and carefully consider the risk factors set forth under “Risk Factors.” You also should read and carefully consider the risk factors relating to Bioventus and Misonix that are contained in the documents that are incorporated by reference in this joint proxy statement/prospectus.

What happens if I sell my shares of Bioventus or Misonix common stock after the respective record date but before the respective special meeting?

The Bioventus record date is earlier than the date of the Bioventus special meeting, and the Misonix record date is earlier than the date of the Misonix special meeting. If you sell or otherwise transfer your shares of Bioventus

 

15


Table of Contents

or Misonix common stock after the applicable record date but before the applicable special meeting, you will, unless special arrangements are made, retain your right to vote at the applicable special meeting.

Who will solicit and pay the cost of soliciting proxies?

Misonix has engaged the services of MacKenzie Partners to assist in the distribution of the proxies. Misonix estimates that it will pay a fee of approximately $18,500 plus reasonable out-of-pocket expenses to MacKenzie Partners for this service.

Bioventus and Misonix also may be required to reimburse banks, brokers and other custodians, nominees and fiduciaries or their respective agents for their expenses in forwarding proxy materials to beneficial owners of Bioventus Misonix common stock, respectively. Bioventus and Misonix directors, officers and employees also may solicit proxies by telephone, by electronic means or in person. They will not be paid any additional amounts for soliciting proxies.

When are the mergers expected to be completed?

Subject to the satisfaction or waiver of the closing conditions described under “The Merger Agreement—Conditions to the Completion of the Merger,” including approval of the Bioventus share issuance proposal by Bioventus stockholders and approval of the Misonix merger proposal by Misonix stockholders, the mergers are currently expected to be completed by the end of the 2021 calendar year. However, neither Bioventus nor Misonix can predict the actual date on which the mergers will be completed, or if the mergers will be completed at all, because completion of the mergers is subject to conditions and factors beyond the control of both companies, including the receipt of certain required regulatory approvals. Bioventus and Misonix hope to complete the merger as soon as reasonably practicable. Also see “The Mergers—Regulatory Approvals.”

What respective equity stakes will Bioventus and Misonix stockholders hold in the combined company immediately following the merger?

Based on the number of shares of Bioventus and Misonix common stock outstanding on September 1, 2021, the latest practicable date prior to the date of this joint proxy statement/prospectus, upon completion of the merger, former Misonix stockholders are expected to own approximately 25% of the outstanding shares of Bioventus common stock and Bioventus stockholders immediately prior to the merger are expected to own approximately 75% of the outstanding shares of Bioventus common stock. The relative ownership interests of Bioventus stockholders and former Misonix stockholders in the combined company immediately following the merger will depend on the number of shares of Bioventus and Misonix common stock issued and outstanding immediately prior to the merger.

If I am a Misonix stockholder, how will I receive the merger consideration to which I am entitled?

Your receipt of the merger consideration will depend on whether your shares of Misonix common stock are represented by stock certificates (“Misonix stock certificates”) or if you hold book-entry shares (“Misonix book-entry shares”). Not less than 30 days prior to the anticipated closing date of the first merger, the exchange agent will mail to each holder of record of Misonix common stock a letter of election and transmittal. You are encouraged to complete and return your letter of election and transmittal in accordance with the instructions therein as soon as reasonably practicable.

For Misonix stock certificates, no later than three business days after the consummation of the mergers, the exchange agent will mail to each holder of record of Misonix stock certificates (a) a notice advising such holder of the effectiveness of the mergers, and (b) a letter of transmittal and (c) instructions for surrendering Misonix stock certificates to the exchange agent.

 

16


Table of Contents

Upon surrender of a Misonix stock certificate and a duly executed letter of election and transmittal (or letter of transmittal if an election is not submitted) to the exchange agent in compliance with the instructions for surrender, the exchange agent will mail to each holder of record, as promptly as reasonably practicable thereafter:

 

   

a statement reflecting the number of whole shares of Bioventus class A common stock, if any, that such holder is entitled to receive in non-certificated book-entry form in the name of such record holder; and

 

   

a check, or wire transfer of immediately available funds (provided that such holder has provided wire transfer instructions and is entitled to cash in excess of $250,000), in the amount (after giving effect to any required tax withholdings as provided in the merger agreement) of (a) any applicable cash election consideration, (b) any cash in lieu of fractional shares of Bioventus class A common stock plus (c) any unpaid cash dividends and any other dividends or other distributions that such holder has the right to receive pursuant to the merger agreement.

For Misonix book-entry shares that are not held through DTC, upon the later of the consummation of the mergers and the holder’s delivery to the exchange agent of a duly executed letter of election and transmittal (or letter of transmittal, if an election is not submitted), the exchange agent will pay and deliver to each such holder of record of any such Misonix book-entry shares:

 

   

the applicable stock election consideration, if any, that such holder is entitled to receive in non-certificated book-entry form in the name of such record holder; and

 

   

a check, or wire transfer of immediately available funds (provided that such holder has provided wire transfer instructions and is entitled to cash in excess of $250,000), in the amount (after giving effect to any required tax withholdings as provided in the merger agreement) of (a) any applicable cash election consideration, (b) any cash in lieu of fractional shares of Bioventus class A common stock plus (c) any unpaid cash dividends and any other dividends or distributions that such holder has the right to receive pursuant to the merger agreement. The exchange agent will promptly cancel each such non-DTC book-entry share.

For Misonix share certificates and Misonix book-entry shares not held through DTC, Misonix stockholders should complete and return the letter of election and transmittal to the exchange agent even if the stockholder is making no election because the exchange agent will require your transmittal information requested in the letter. Stockholders who do not return a letter of election and transmittal to the exchange agent prior to the election deadline will be mailed a letter of transmittal from the exchange agent following the consummation of the merger.

For Misonix book-entry shares that are held through DTC, no later than three business days after the consummation of the mergers, the exchange agent will transmit to DTC or its nominees, upon surrender of shares held of record by DTC or its nominees in accordance with DTC’s customary surrender procedures:

 

   

the applicable stock election consideration, if any, that such holder is entitled to receive in non-certificated book-entry form in the name of such record holder; and

 

   

a check, or wire transfer of immediately available funds (provided that such holder has provided wire transfer instructions and is entitled to cash in excess of $250,000), in the amount (after giving effect to any required tax withholdings as provided in the merger agreement) of (a) any applicable cash election consideration, (b) any cash in lieu of fractional shares of Bioventus Class A Common Stock plus (c) any unpaid cash dividends and any other dividends or distributions that such holder has the right to receive pursuant to the merger agreement. The exchange agent will promptly cancel each such DTC book-entry share.

What should I do now?

You should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes. Then, you may vote by proxy over the internet or telephone using the instructions included with the accompanying proxy card, or promptly complete your proxy card and return it in the enclosed postage-paid envelope, so that your shares will be voted in accordance with your instructions.

 

17


Table of Contents

How can I find more information about Bioventus and Misonix?

You can find more information about Bioventus and Misonix from various sources described under “Where You Can Find More Information.”

Whom do I call if I have questions about the special meetings or the merger?

If you have questions about the special meetings or the merger, or desire additional copies of this joint proxy statement/prospectus or additional proxies, you may contact the applicable company contacts below:

 

If you are an Bioventus stockholder:

 

Bioventus Inc.,

Attn: Corporate Secretary

4721 Emperor Boulevard, Suite 100,

Durham, North Carolina 27703

tony.dadamio@bioventus.com

(919) 474-6700

  

If you are a Misonix stockholder:

 

Misonix, Inc.

Attention: Secretary

1938 New Highway

Farmingdale, NY 11735

misonixproxy@misonix.com

(631) 694-9555

 

18


Table of Contents

SUMMARY

For your convenience, provided below is a brief summary of certain information contained in this joint proxy statement/prospectus. This summary highlights selected information from this joint proxy statement/ prospectus and does not contain all of the information that may be important to you as a Bioventus or Misonix stockholder. To understand the merger fully and for a more complete description of the terms of the merger, you should read carefully this entire joint proxy statement/prospectus, its annexes and the other documents to which you are referred. Items in this summary include a page reference directing you to a more complete description of those items. You may obtain the information incorporated by reference in this joint proxy statement/prospectus, without charge, by following the instructions under “Where You Can Find More Information.”

The Parties to the Merger (Page 117)

Bioventus Inc.

Bioventus is a global leader of innovations for active healing. Through a combination of internal product development, product/business acquisition, and distribution agreements, it will bring to market products which address a growing need for clinically effective, cost efficient, minimally invasive medical treatments, that engage and enhance the body’s natural healing processes. Bioventus’ principal place of business is 4721 Emperor Boulevard, Suite 100, Durham, North Carolina 27703, and its telephone number is (919) 474-6700.

Misonix, Inc.

Misonix designs, manufactures and markets minimally invasive surgical ultrasonic medical devices. These products are used for precise bone sculpting, removal of soft and hard tumors, and tissue debridement, primarily in the areas of neurosurgery, orthopedic surgery, plastic surgery, wound care and maxillo-facial surgery. Misonix also exclusively markets, sells and distributes skin allografts and wound care products used to support healing of wounds, and which complement Misonix’s ultrasonic medical devices. Misonix’s principal place of business is 1938 New Highway, Farmingdale, New York, and its telephone number is (631) 694-9555.

Oyster Merger Sub I, Inc.

Merger Sub I was formed by Bioventus solely in contemplation of the merger, has not conducted any business and has no assets, liabilities or obligations of any nature other than as set forth in the merger agreement. By operation of the merger, Merger Sub I will be merged with and into Misonix, with Misonix continuing as the surviving corporation. Merger Sub’s principal executive offices are located at 4721 Emperor Boulevard, Suite 100, Durham, North Carolina 27703, and its telephone number is (919) 474-6700.

Oyster Merger Sub II, LLC

Merger Sub II was formed by Bioventus solely in contemplation of the merger, has not conducted any business and has no assets, liabilities or obligations of any nature other than as set forth in the merger agreement. By operation of the merger, following the first merger, Misonix will be merged with and into Merger Sub II, with Merger Sub II continuing as the surviving entity (renamed as Misonix LLC) and a wholly owned subsidiary of Bioventus. Merger Sub’s principal executive offices are located at 4721 Emperor Boulevard, Suite 100, Durham, North Carolina 27703, and its telephone number is (919) 474-6700.

The Mergers and the Merger Agreement (Pages 137 and 198)

The terms and conditions of the merger are contained in the merger agreement, a copy of which is attached as Annex A hereto. Bioventus and Misonix encourage you to read the merger agreement carefully and in its entirety, as it is the legal document that governs the merger.


 

19


Table of Contents

The merger agreement provides that, subject to the terms and conditions of the merger agreement, Merger Sub I will be merged with and into Misonix, with Misonix continuing as the surviving corporation and subsequently, Misonix will be merged with and into Merger Sub II, with Merger Sub II continuing as the surviving entity in the second merger and as a wholly owned subsidiary of Bioventus.

Merger Consideration (Page 137)

If the mergers are completed, each issued and outstanding share of Misonix common stock (other than treasury shares of Misonix, shares held by a subsidiary of Misonix, Bioventus or Merger Sub I, and shares held by Misonix stockholders who have not voted in favor of the Misonix merger proposal and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be converted into the right to receive either an amount in cash equal to $28.00 or 1.6839 validly issued, fully paid and non-assessable shares of Bioventus class A common stock, based on the election of the holder thereof and, in each case, subject to automatic proration and adjustment in accordance with the terms of the merger agreement, as described under “The Merger Agreement—The Merger Consideration”

Proration and Reallocation (Page 137)

The aggregate amount of cash payable by Bioventus in the mergers will be equal to $10.50 multiplied by the number of outstanding shares of Misonix common stock at 5:00 p.m., New York City time, on the election deadline. In order to deliver this aggregate cash amount, the merger agreement provides for pro rata adjustments to, and reallocation of, the cash and stock elections made by Misonix stockholders, as well as the allocation of consideration to be paid with respect to shares of Misonix common stock as to which no election regarding the form of merger consideration to be paid to them, is received prior to the election deadline. Such no election shares will be exchanged for the cash consideration, the stock consideration or a combination of both. Additionally, depending on the elections made by other Misonix stockholders, each Misonix stockholder who elects to receive Bioventus class A common stock for their shares in the mergers, referred to as “stock election shares” may receive a portion of their consideration in cash, and each Misonix stockholder who elects to receive cash for their shares in the mergers, referred to as “cash election shares” may receive a portion of their consideration in Bioventus class A common stock.

If the elected cash consideration, which is the amount equal to the aggregate number of cash election shares multiplied by $28.00, exceeds the available cash amount, then:

 

   

all stock election shares and all no election shares will be exchanged for 1.6839 shares of Bioventus class A common stock; and

 

   

a portion of the cash election shares of each Misonix stockholder will be exchanged for $28.00 in cash as follows: cash election shares exchanged for $28.00 in cash =

(number of such stockholder’s cash election shares) * (maximum cash amount)

elected cash consideration

If the elected cash consideration is less than the available cash amount, which difference we refer to as the shortfall amount, then:

 

   

all cash election shares will be exchanged for the cash consideration; and

 

   

all stock election shares and no election shares will be treated in the following manner:

 

   

if the shortfall amount is less than or equal to the product of the aggregate number of no election shares and $28.00, which we refer to as the “no election value”, then (1) all stock election shares will be exchanged for 1.6839 shares of Bioventus class A common stock, and (2) a portion of the


 

20


Table of Contents
 

no election shares of each Misonix stockholder, calculated as follows, will be exchanged for $28.00 in cash as follows (and the remaining portion of such stockholder’s no election shares, if any, will be exchanged for 1.6839 shares of Bioventus class A common stock):

no election shares exchanged for cash consideration =

(number of no election shares of such stockholder) * (shortfall amount)

(no election value)

 

   

if the shortfall amount is more than the no election value, then (1) all no election shares will be exchanged for $28.00 in cash and (2) a portion of the stock election shares of each stockholder will be exchanged for $28.00 in cash as follows (and the remaining portion of such stockholder’s stock election shares will be exchanged for 1.6839 shares of Bioventus class A common stock):

stock election shares exchanged for cash consideration =

(number of stock election shares of such stockholder) * (shortfall amount – no election value)

(aggregate number of stock election shares) * $28.00

If the elected cash consideration equals the available cash amount, then: (1) all cash election shares will be converted into the right to receive $28.00 in cash and (2) all stock election shares and all no election shares will be converted into the right to receive 1.6839 shares of Bioventus class A common stock.

See “The Merger Agreement—Proration”.

Election Procedures (Page 138)

The exchange agent will mail to Misonix stockholders of record not less than 30 days prior to the anticipated closing date of the first merger a letter of election and transmittal. The letter of election and transmittal enables Misonix stockholders to choose to make a cash election, a stock election or no election with respect to each share of Misonix common stock eligible to receive the merger consideration. Misonix intends to issue a press release at least five business days prior to the expiration of the election period informing Misonix stockholders of the expiration of the election period, which expiration we refer to as the “election deadline”, to make their election and return their completed letters of election and transmittal. If a Misonix stockholder holds shares of Misonix common stock through a bank, brokerage firm or other nominee, such bank, brokerage firm, or other nominee, as applicable, will provide such stockholder with instructions on how to make an election. Election forms must be returned to the broker, bank or nominee in time for it to respond prior to the election deadline, therefore, you are encouraged to pay close attention to, and abide by, any election deadlines provided by the bank, brokerage firm or other nominee holding your shares, as that deadline may be earlier than the election deadline described in this joint proxy statement/prospectus.

Any election will have been properly made only if the exchange agent has actually received a properly completed letter of election and transmittal by the election deadline. Any election form may be revoked or changed by written notice received by the exchange agent prior to the election deadline. If an election form is revoked, the shares of Misonix common stock as to which such election previously applied will be no election shares unless an election is subsequently submitted by the Misonix stockholder prior to the election deadline. For Misonix share certificates and Misonix book-entry shares not held through DTC, Misonix stockholders should complete and return the letter of election and transmittal to the exchange agent even if the stockholder is making no election because the exchange agent will require your transmittal information requested in the letter. Stockholders who do not return a letter of election and transmittal to the exchange agent prior to the election deadline will be mailed a letter of transmittal from the exchange agent following the consummation of the merger. See “The Merger Agreement—Election Procedures”.


 

21


Table of Contents

Treatment of Misonix Equity Awards (Page 204)

Each outstanding Misonix stock option held by employees and directors of Misonix who meet the S-8 definition of “employee” shall (i) become fully vested immediately upon the effective time and (ii) be assumed by Bioventus and converted automatically into an option to purchase Bioventus class A common stock based on the option exchange ratio (with the exercise price with respect to such option being adjusted based on the option exchange ratio). Aside from the foregoing adjustments, the assumed options will generally remain subject to the same vesting and other terms and conditions that applied to such awards immediately prior to the effective time.

Each outstanding Misonix stock option held by an individual who does not meet the S-8 definition of “employee” will become fully vested and be settled in cash immediately prior to the effective time in an amount equal to the product of (x) the number of shares of Misonix common stock subject to the applicable option and (y) the excess, if any, of (i) the average of the volume-weighted average trading prices per share of Bioventus Class A Common Stock on Nasdaq (as reported by Bloomberg L.P.) on each of the five consecutive trading days ending on (and including) the trading day that is three trading days prior to the date of the effective time over (ii) the per share exercise price of such option.

See the section entitled “The Merger Agreement—Treatment of Misonix Equity Awards” of this joint proxy statement/prospectus.

Recommendation of the Bioventus Board of Directors; Bioventus’ Reasons for the Merger (Page 155)

The Bioventus board unanimously recommends that you vote “FOR” the Bioventus share issuance proposal and “FOR” the Bioventus adjournment proposal. For a description of some of the factors considered by the Bioventus board in reaching its decision to approve the merger agreement and the transactions contemplated thereby, including the merger and the share issuance, and additional information on the recommendation of the Bioventus board, see “The Mergers—Recommendation of the Bioventus Board of Directors; Bioventus’ Reasons for the Merger.”

Recommendation of the Misonix Board of Directors; Misonix’s Reasons for the Merger (Page 158)

The Misonix board unanimously recommends that you vote “FOR” the Misonix merger proposal, “FOR” the Misonix compensation proposal and “FOR” the Misonix adjournment proposal. For a description of some of the factors considered by the Misonix board in reaching its decision to approve the merger agreement and the transactions contemplated thereby, including the merger, and additional information on the recommendation of the Misonix board, see “The Mergers—Recommendation of the Misonix Board of Directors; Misonix’s Reasons for the Merger.”

Opinions of Bioventus’ Financial Advisor

Opinion of Perella Weinberg (Page 165; Annex B)

Bioventus retained Perella Weinberg Partners LP, or Perella Weinberg, to act as its financial advisor in connection with the mergers. Bioventus selected Perella Weinberg based on its qualifications, expertise and reputation and its knowledge of the business and affairs of Bioventus, Misonix and the industries in which Bioventus and Misonix conduct their respective businesses. Perella Weinberg and its affiliates, as part of their investment banking business, are continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, leveraged buyouts and other transactions as well as for corporate and other purposes.

On July 28, 2021, Perella Weinberg rendered its oral opinion, subsequently confirmed in writing, to the Bioventus board that, as of such date and based upon and subject to the various assumptions made, procedures


 

22


Table of Contents

followed, matters considered and qualifications and limitations set forth therein, the merger consideration to be paid by Bioventus pursuant to the merger agreement, consisting of, at the option of the holders of Misonix common stock issued and outstanding immediately prior to the effective time of the first merger, (other than treasury shares of Misonix, shares held by a subsidiary of Misonix, Bioventus or Merger Sub I, and shares held by Misonix stockholders who have not voted in favor of the Misonix merger proposal and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law), and subject to certain limitations and proration procedures set forth in the merger agreement (as to which Perella Weinberg expressed no opinion), (i) $28.00 in cash per share of Misonix common stock, or the cash election consideration, or (ii) 1.6839 shares of Bioventus common stock per share of Misonix common stock, or the stock election consideration was, as of the date of the opinion, fair, from a financial point of view, to Bioventus.

The full text of Perella Weinberg’s written opinion, dated July 29, 2021 which sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken by Perella Weinberg, is attached hereto as Annex B and is incorporated by reference herein. Perella Weinberg’s opinion was not intended to be and does not constitute a recommendation to any holder of Bioventus common stock or any other person as to how such person should vote or otherwise act with respect to the mergers or any other matter. Perella Weinberg’s opinion does not in any manner address the prices at which Misonix common stock or Bioventus common stock will trade at any time. In addition, Perella Weinberg expressed no opinion as to the fairness of the mergers to the holders of any class of securities, creditors or other constituents of Bioventus or Misonix or as to the underlying decision by any person to engage in the mergers or as to the relative merits of the mergers compared to alternative transactions or business strategies. Perella Weinberg provided its opinion for the information and assistance of the Bioventus board in connection with, and for the purposes of its evaluation of, the mergers. This summary is qualified in its entirety by reference to the full text of the opinion. Opinion of Misonix’s Financial Advisor.

Opinion of JP Morgan Securities (Page 176; Annex C)

 

J.P. Morgan rendered an oral opinion to the Misonix board on July 28, 2021 (subsequently confirmed in writing on July 29, 2021) to the effect that, as of such date and based on and subject to the assumptions made, procedures followed, matters considered and other limitations on the review undertaken by J.P. Morgan in preparing its opinion, the merger consideration to be paid to the holders of Misonix common stock in the merger was fair, from a financial point of view, to such holders, as more fully described in the section entitled “Opinion of Misonix’s Financial Advisor” of this joint proxy statement/prospectus. The full text of the written opinion of J.P. Morgan, dated July 29, 2021, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing its opinion, is attached as Annex C to this joint proxy statement/prospectus and is incorporated herein by reference.

The Bioventus Special Meeting (Page 119)

In light of ongoing developments related to the COVID-19 pandemic, the Bioventus special meeting will be held solely in a virtual meeting format via live webcast on October 26, 2021, beginning at 11:00 a.m., Eastern Time. Bioventus stockholders will be able to virtually attend and vote at the Bioventus special meeting by visiting the Bioventus special meeting website at www.virtualshareholdermeeting.com/BVS2021SM.

The purposes of the Bioventus special meeting are as follows:

 

   

Bioventus Proposal 1: Approval of the Share Issuance. To consider and vote on the Bioventus share issuance proposal; and

 

   

Bioventus Proposal 2: Adjournment of the Bioventus Special Meeting. To consider and vote on the Bioventus adjournment proposal.


 

23


Table of Contents

Completion of the mergers is conditioned on the approval of the Bioventus share issuance proposal (Bioventus Proposal 1) by Bioventus stockholders.

Only holders of record of shares of Bioventus common stock outstanding as of the close of business on September 22, 2021 (the Bioventus record date) are entitled to notice of, and to vote at, the Bioventus special meeting or any adjournment or postponement thereof. Bioventus stockholders may cast one vote for each share of Bioventus common stock that they own of record as of the Bioventus record date.

A quorum of Bioventus stockholders is necessary to hold the Bioventus special meeting. A quorum will exist at the Bioventus special meeting if holders of record of shares of Bioventus common stock representing a majority in voting power of the stock issued and outstanding and entitled to vote at the meeting, is present in person, or by remote communication, if applicable, or represented by proxy. All shares of Bioventus common stock represented by a valid proxy and all abstentions will be counted as present for purposes of establishing a quorum. All of the proposals for consideration at the Bioventus special meeting are considered “non-routine” matters under Nasdaq rules, and, therefore, brokers are not permitted to vote on any of the matters to be considered at the Bioventus special meeting unless they have received instructions from the beneficial owners. As a result, no “broker non-votes” are expected at the Bioventus special meeting, and shares held in “street name” will not be counted as present for the purpose of determining the existence of a quorum unless the Bioventus stockholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals brought before the Bioventus special meeting.

Assuming a quorum is present at the Bioventus special meeting, approval of the Bioventus share issuance proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Bioventus common stock that are virtually present via the Bioventus special meeting website or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus share issuance proposal. Accordingly, any shares not virtually present or represented by proxy (including due to the failure of an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Bioventus share issuance proposal. An abstention or other failure of any shares virtually present or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus share issuance proposal to vote on the Bioventus share issuance proposal will have the same effect as a vote “AGAINST” the Bioventus share issuance proposal. However, assuming a quorum is present at the Bioventus special meeting, if an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Bioventus share issuance proposal, voting power will deemed to be withheld with respect to the Bioventus share issuance proposal and such failure to provide voting instructions will have no effect on the Bioventus share issuance proposal.

Whether or not a quorum is present at the Bioventus special meeting, approval of the Bioventus adjournment proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Bioventus common stock that are virtually present via the Bioventus special meeting website or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus adjournment proposal. Accordingly, any shares not virtually present or represented by proxy (including due to the failure of an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Bioventus adjournment proposal. An abstention or other failure of any shares virtually present or represented by proxy and entitled to vote on the Bioventus adjournment proposal to vote at the Bioventus special meeting on the Bioventus adjournment proposal will have the same effect as a vote “AGAINST” the Bioventus adjournment proposal. However, if an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Bioventus adjournment proposal, voting power will deemed to be withheld with respect to the Bioventus adjournment proposal and such failure to provide voting instructions will have no effect on the Bioventus adjournment proposal.


 

24


Table of Contents

The Misonix Special Meeting (Page 128)

The purpose of the Misonix special meeting is to consider and vote on each of the following proposals, each of which is further described in this joint proxy statement/prospectus:

 

   

Misonix Proposal 1: Adoption of the Merger Agreement. To consider and vote on the Misonix merger proposal;

 

   

Misonix Proposal 2: Approval, on an Advisory Non-Binding Basis, of Certain Merger-Related Compensatory Arrangements with Misonix’s Named Executive Officers. To consider and vote on the Misonix compensation proposal; and

 

   

Misonix Proposal 3: Adjournment of the Misonix Special Meeting. To consider and vote on the Misonix adjournment proposal.

Completion of the mergers is conditioned on the approval of the Misonix merger proposal (Misonix Proposal 1) by Misonix stockholders.

Only holders of record of shares of Misonix common stock outstanding as of the close of business on September 22, 2021 (the Misonix record date) are entitled to notice of, and to vote at, the Misonix special meeting or any adjournment or postponement thereof. Misonix stockholders may cast one vote for each share of Misonix common stock that they own of record as of the Misonix record date.

A quorum of Misonix stockholders is necessary to conduct the Misonix special meeting. The presence of the holders of a majority of the outstanding shares of Misonix common stock entitled to vote at the Misonix special meeting will constitute a quorum. Shares of Misonix common stock represented at the Misonix special meeting in person or by a properly authorized and submitted proxy (submitted by mail, by telephone or over the Internet), entitled to vote, but not voted, including shares for which a Misonix stockholder directs an “abstention” from voting, will be counted for purposes of determining a quorum. However, because all of the proposals for consideration at the Misonix special meeting are considered “non-routine” matters under Nasdaq rules, shares held in “street name” will not be counted as present for the purpose of determining the existence of a quorum unless the Misonix stockholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals at the Misonix special meeting. If a quorum is not present, Misonix expects that the Misonix special meeting will be adjourned or postponed until the holders of the number of shares of Misonix common stock required to constitute a quorum attend. At any subsequent reconvening of the Misonix special meeting, all proxies will be voted in the same manner as the proxies would have been voted at the original convening of the Misonix special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the subsequent meeting.

The Misonix special meeting will be held at Misonix’s corporate offices, located at 1938 New Highway, Farmingdale, NY 11735 on October 26, 2021, beginning at 10:00 a.m., Eastern Time. As part of Misonix’s precautions regarding the novel coronavirus or COVID-19, Misonix is planning for the possibility that the meeting may be held solely by means of remote communications. If Misonix takes this step, Misonix will announce the decision to do so in advance, and details on how to participate, including details on how to inspect a list of stockholders of record, will be posted on our website at www.misonix.com and filed with the SEC as proxy material.

Assuming a quorum is present at the Misonix special meeting, approval of the Misonix merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Misonix common stock. For the Misonix compensation proposal, a Misonix stockholder may indicate “FOR,” “AGAINST” or “ABSTAIN” on the proxy card. Brokerage firms and nominees will not have the authority to vote their customers’ unvoted shares on the Misonix merger proposal or to vote their customers’ shares if the customers have not furnished voting


 

25


Table of Contents

instructions within a specified period of time prior to the Misonix special meeting. Any shares not present or represented by proxy (including due to the failure of a Misonix stockholder who holds shares of Misonix common stock in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) and any abstention, or other failure of any shares of Misonix common stock present or represented by proxy and entitled to vote at the Misonix special meeting on the Misonix merger proposal to vote on the Misonix merger proposal, will each have the same effect as a vote “AGAINST” the Misonix merger proposal.

Assuming a quorum is present at the Misonix special meeting, approval of the Misonix compensation proposal requires the affirmative vote of the holders of a majority of the votes cast on the Misonix compensation proposal by holders of Misonix common stock present or represented by proxy at the Misonix special meeting. For the Misonix compensation proposal, a Misonix stockholder may indicate “FOR,” “AGAINST” or “ABSTAIN” on the proxy card. For purposes of determining the number of votes cast with respect to the Misonix compensation proposal, only those votes cast “FOR” or “AGAINST” are included. Brokerage firms and nominees will not have the authority to vote their customers’ unvoted shares on the Misonix compensation proposal or to vote their customers’ shares if the customers have not furnished voting instructions within a specified period of time prior to the Misonix special meeting. Abstentions and broker non-votes are counted only for purposes of determining whether a quorum is present at the meeting and therefore will have no effect on the outcome of the vote for the Misonix compensation proposal. Approval of the Misonix compensation proposal is not a condition to completion of the mergers, and the vote with respect to this proposal is advisory only and will not be binding on Misonix, the surviving corporation, the surviving company or Bioventus. If the mergers are completed, the transactions-related executive compensation may be paid to Misonix’s named executive officers to the extent payable in accordance with the terms of the compensation arrangements even if Misonix stockholders fail to approve, by non-binding, advisory vote, the Misonix compensation proposal.

Whether or not a quorum is present at the Misonix special meeting, approval of the Misonix adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the shares of Misonix common stock present or represented by proxy at the Misonix special meeting. Accordingly, any shares not present or represented by proxy (including due to the failure of a Misonix stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Misonix adjournment proposal. An abstention, or other failure of any shares of Misonix common stock present or represented by proxy and entitled to vote at the Misonix special meeting on the Misonix adjournment proposal to vote on the Misonix adjournment proposal, will have the same effect as a vote “AGAINST” the Misonix adjournment proposal. However, if a Misonix stockholder who holds shares of Misonix common stock in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Misonix adjournment proposal, voting power will deemed to be withheld with respect to the Misonix adjournment proposal and such failure to provide voting instructions will have no effect on the Misonix adjournment proposal.

Support Agreements

Subsequent to the execution of the merger agreement, Misonix entered into a voting agreement (the “Bioventus support agreement”) with EW Healthcare Partners Acquisition Fund, L.P., White Pine Medical, LLC (a subsidiary of EW Partners Acquisition Fund, L.P.), Smith & Nephew, Inc., Smith & Nephew USD Ltd and AMP-CF Holdings, LLC (together, the “Bioventus supporting stockholders”), pursuant to which such stockholders have agreed, among other things, to vote the shares of Bioventus common stock that they beneficially own at the time such vote is taken in favor of Bioventus share issuance proposal and against approval of any proposal made in opposition to, in competition with, or inconsistent with, the merger agreement or the transaction. As of the record date for the Bioventus special meeting, such stockholders beneficially own approximately 67.4% of the outstanding shares of Bioventus common stock. Therefore, the Bioventus supporting


 

26


Table of Contents

stockholders hold a sufficient number of shares of Bioventus common stock in order to approve the Bioventus share issuance proposal. On July 29, 2021, in connection with execution of the merger agreement, each of the Bioventus supporting stockholders have entered into lock up agreements with Bioventus (each a “lock up agreement”) restricting the sale and transfer of the capital stock of Bioventus for a period of 90 or 180 days, subject to the terms of the lock up agreement.

Subsequent to the execution of the merger agreement, Bioventus entered into a voting agreement (the “Misonix support agreement”) with each of Stavros G. Vizirgianakis, 1315 Capital, LLC, SV Life Sciences Fund VI Strategic Partners, L.P. and SV Life Sciences Fund VI, L.P. (together, the “Misonix supporting stockholders”), pursuant to which such stockholders have agreed, among other things, to vote the shares of Misonix common stock that they own at the time such vote is taken in favor of the Misonix merger proposal and Misonix compensation proposal and against approval of any proposal made in opposition to, in competition with, or inconsistent with, the merger agreement or the transaction. As of the record date for the Misonix special meeting, the Misonix supporting stockholders beneficially own approximately 28.8% of the outstanding shares of Misonix common stock.

Interests of Bioventus Directors and Executive Officers in the Mergers (Page 337)

Other than with respect to continued service for, employment by and the right to continued indemnification by the combined company, as of the date of this joint proxy statement/prospectus, Bioventus directors and executive officers do not have interests in the mergers that are different from, or in addition to, the interests of other Bioventus stockholders generally. See “Interests of Bioventus Directors and Executive Officers in the Mergers.”

Interests of Misonix Directors and Executive Officers in the Merger (Page 338)

In considering the recommendations of the Misonix board, Misonix stockholders should be aware that Misonix directors and executive officers have interests in the mergers, including financial interests, which may be different from, or in addition to, the interests of other Misonix stockholders generally. The Misonix board was aware of and considered these interests, among other matters, when it determined that the mergers are fair to and in the best interests of Misonix and its stockholders, approving and declaring advisable the merger agreement and the transactions contemplated thereby, and recommending that Misonix stockholders approve the Misonix mergers. These interests are discussed in more detail under “Interests of Misonix Directors and Executive Officers in the Mergers.”

For an estimate of the value of the benefits and financial interests that the Misonix named executive officers may become eligible to receive as a result of their interests in the mergers, assuming, among other things, that the merger was completed on August 31, 2021 and each such named executive officer experienced a qualifying termination of employment immediately thereafter, see “Interests of Misonix Directors and Executive Officers in the Mergers—Quantification of Payments and Benefits to Misonix Named Executive Officers—Golden Parachute Compensation.”

Governance of the Combined Company (Page 205)

Bioventus has agreed to appoint Stavros Vizirgianakis and Patrick Beyer, each a member of the Misonix board, the opportunity to join the Bioventus board as of the effective time, with such directors to hold office until the earliest to occur of the appointment or election and qualification of his or her respective successor or his or her death, resignation, disqualification or proper removal.

No other governance changes are planned in connection with the mergers.


 

27


Table of Contents

Organizational Documents and Directors and Officers of the Surviving Corporation (Page 205)

At the effective time, Misonix’s certificate of incorporation as in effect immediately prior to the effective time and Misonix’s bylaws as in effect immediately prior to the effective time will continue to be the certificate of incorporation and the bylaws of the surviving company of the first merger. At the second effective time, the certificate of formation and the limited liability company agreement of Merger Sub II in effect immediately prior to the second effective time, will continue to be the certificate of formation and the limited liability company agreement of Merger Sub II, as the surviving entity of the second merger.

Certain Beneficial Owners of Bioventus Common Stock (Page 369)

At the close of business on September 1, 2021, the latest practicable date prior to the date of this joint proxy statement/prospectus, Bioventus directors and executive officers and their affiliates, as a group, owned and were entitled to vote less than 1% of the shares of Bioventus common stock outstanding on such date. Although none of them has entered into any agreement obligating them to do so, Bioventus currently expects that all Bioventus directors and executive officers will vote their shares “FOR” the Bioventus share issuance proposal and “FOR” the Bioventus adjournment proposal. For more information regarding the security ownership of Bioventus directors and executive officers, see “Certain Beneficial Owners of Bioventus Common Stock—Security Ownership of Bioventus Directors and Executive Officers.”

Certain Beneficial Owners of Misonix Common Stock (Page 372)

At the close of business on September 1, 2021, the latest practicable date prior to the date of this joint proxy statement/ prospectus, Misonix directors and executive officers and their affiliates, as a group, owned and were entitled to vote approximately 31.62% of the shares of Misonix common stock outstanding on such date. On July 29, 2021, Stavros Vizirgianakis, Misonix’s Chief Executive Officer and Director, entered into a Voting and Support Agreement with Bioventus and the stockholders named therein, pursuant to which he agreed to, among other things, vote his shares of Misonix common stock in favor of the adoption of the Misonix merger proposal. Although no Misonix director or executive officer other than Mr. Vizirgianakis has entered into any agreement obligating them to vote their shares of Misonix common stock in favor of the proposals at the special meeting, Misonix currently expects that all Misonix directors and executive officers will vote their shares of Misonix common stock “FOR” the Misonix merger proposal, “FOR” the Misonix compensation proposal and “FOR” the Misonix adjournment proposal. See “Interests of Misonix Directors and Executive Officers in the Merger” and the arrangements described in Misonix’s Annual Report on Form 10-K, which is incorporated by reference in this joint proxy statement/prospectus.

Regulatory Approvals (Page 195)

Bioventus, Merger Sub I, Merger Sub II and Misonix have each agreed to cooperate with each other and to use (and to cause their subsidiaries to use) reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary to cause the conditions to the closing to be satisfied as promptly as reasonably practicable (and in any event no later than the end date) and to consummate and make effective the transactions contemplated by the merger agreement, including to obtain all required regulatory approvals as promptly as practicable, subject to certain limits. See “The Mergers—Regulatory Approvals.”

The obligations of Bioventus and Misonix to consummate the mergers are subject to, among other conditions, the termination or expiration of any waiting period (or any extension thereof) applicable to the transactions contemplated by the merger agreement under the HSR Act.


 

28


Table of Contents

Ownership of the Combined Company (Page 196)

Based on the number of shares of Bioventus and Misonix common stock outstanding as of September 1, 2021, the latest practicable date prior to the date of this joint proxy statement/prospectus, upon completion of the merger, former Misonix stockholders are expected to own approximately 25% of the outstanding shares of Bioventus common stock and Bioventus stockholders immediately prior to the merger are expected to own approximately 75% of the outstanding shares of Bioventus common stock. The relative ownership interests of Bioventus stockholders and former Misonix stockholders in the combined company immediately following the merger will depend on the number of shares of Bioventus and Misonix common stock issued and outstanding immediately prior to the merger.

Appraisal Rights (Page 361)

Pursuant to Section 262 of the DGCL, Misonix stockholders who do not vote in favor of Misonix merger proposal and who comply with the applicable requirements of Section 262 of the DGCL have the right to seek appraisal of such shares by the Delaware Court of Chancery and to receive payment in cash of the fair value of those shares. It is possible that the fair value as determined by the Delaware Court of Chancery may be more or less than, or the same as, the per share value of the merger consideration.

Misonix stockholders who wish to preserve their appraisal rights must make a demand for appraisal prior to the time the Misonix stockholder vote is taken on the Misonix merger proposal. In addition to submitting a demand for appraisal, such Misonix stockholders must continuously hold such shares through the effective time, must not vote in favor of the Misonix merger proposal, must not surrender their shares in exchange for the merger consideration, and must otherwise follow the procedures prescribed by Section 262 of the DGCL.

You are encouraged to read Section 262 of the DGCL carefully and in their entirety. Due to the complexity of the procedures for exercising your appraisal rights, Misonix stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to strictly comply with these provisions will result in the loss of appraisal rights. See the section entitled “Appraisal Rights” of this joint proxy statement/prospectus for additional information and the text of Section 262 of the DGCL reproduced in its entirety as Annex D to this proxy statement/prospectus.

Bioventus stockholders are not entitled to appraisal rights in connection with the mergers.

Conditions to the Completion of the Mergers (Page 222)

The obligations of each of Bioventus and Misonix to complete the mergers are subject to the satisfaction or waiver, as of the closing, of each of the following conditions:

 

   

the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part must have become effective in accordance with the provisions of the Securities Act, no stop order may have been issued by the SEC and remain in effect with respect to the Form S-4 and no proceedings for that purpose may have been commenced or threatened in writing by the SEC and not withdrawn;

 

   

approval by Misonix stockholders of the Misonix merger proposal must have been obtained;

 

   

approval by Bioventus stockholders of the Bioventus share issuance proposal must have been obtained;

 

   

any waiting period (or any agreed upon extension of any waiting period or commitment not to consummate the mergers for any period of time) applicable to the consummation of the mergers under the HSR Act must have expired or been terminated by the relevant governmental entity, and there must be no pending agreement between Bioventus and any governmental entity not to close;

 

   

the shares of Bioventus class A common stock to be issued pursuant to the first merger, including the shares of Bioventus class A common stock to be issued upon the exercise of converted Misonix stock


 

29


Table of Contents
 

options and upon vesting of converted Misonix RSUs, must have been approved for listing (subject to notice of issuance) on Nasdaq; and

 

   

no law or order preventing, enjoining or making illegal the consummation of the mergers may have been entered, issued or adopted by any court of competent jurisdiction or other governmental entity of competent jurisdiction and remain in effect.

In addition, each party’s obligation to complete the mergers is subject to, among other things, the accuracy of certain representations and warranties of the other party and the compliance by such other party with certain of its covenants, in each case, subject to the materiality standards set forth in the merger agreement, and the absence of the occurrence of any material adverse effect.

Neither Bioventus nor Misonix can be certain when, or if, the conditions to the mergers will be satisfied or waived, or that the mergers will be completed.

See “The Merger Agreement—Conditions to the Completion of the Mergers.”

No Solicitation of Acquisition Proposals (Page 211)

As more fully described under “The Merger Agreement—No Solicitation of Acquisition Proposals,” subject to the exceptions summarized below, Bioventus and Misonix have each agreed that they will not (a) solicit, initiate, knowingly encourage, knowingly induce, knowingly assist or knowingly facilitate any inquiries regarding, or the submission or announcement by any person (other than, in the case of Misonix, Bioventus or in the case of Bioventus, Misonix, or its respective affiliates and representatives) of, any proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal (as defined under “The Merger Agreement—No Solicitation of Acquisition Proposals”) (with certain exceptions related to each board of directors informing itself of an acquisition proposal), (b) furnish any information regarding such party or its subsidiaries (other than to the other party and its subsidiaries) or afford access to such party’s or its subsidiaries’ representatives, books, records or property, in each case in connection with, or for the purpose of soliciting, initiating, encouraging or facilitating, or in response to, any inquiry, proposal or offer that constitutes or would reasonably be expected to lead to an acquisition proposal, (c) engage in, enter into, continue or otherwise participate in any discussions or negotiations with any person (other than, in the case of Bioventus, Misonix, or in the case of Misonix, Bioventus, or its respective representatives) with respect to any acquisition proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an acquisition proposal (with certain exceptions related to each board of directors informing itself of an acquisition proposal), (d) approve, adopt, recommend, agree to or enter into, or publicly propose to approve, adopt, recommend, agree to or enter into, any letter of intent, memorandum of understanding or similar document, agreement, commitment or agreement in principle with respect to any acquisition proposal or (e) resolve or agree to do any of the foregoing.

Notwithstanding the restrictions described above, if at any time prior to obtaining approval of the Misonix merger proposal, in the case of Misonix, or the Bioventus share issuance proposal, in the case of Bioventus, Bioventus or Misonix, as applicable, receives a bona fide, written acquisition proposal after the date of the merger agreement that did not result from a breach of the non-solicitation provisions in the merger agreement and that the Bioventus board or the Misonix board, as applicable, determines in good faith (after consultation with its outside legal counsel and financial advisor) that such acquisition proposal constitutes or would reasonably be expected to lead to a superior proposal (as defined under “The Merger Agreement—No Solicitation of Acquisition Proposals”), Bioventus or Misonix, as applicable, may (a) engage in discussions or negotiations with the party making such acquisition proposal and (b) following the receipt from such party making the acquisition proposal, (or there is then in effect with such party) an executed confidentiality agreement with nondisclosure provisions at least as restrictive of such third party as the non-disclosure agreement with Bioventus or Misonix, as applicable, furnish information to such party with respect to Bioventus or Misonix, as applicable, in either case, subject to certain conditions and obligations in the merger agreement.


 

30


Table of Contents

Bioventus and Misonix have also agreed to notify the other (a) promptly following (and in any event, within 48 hours of the receipt of) any acquisition proposal or any inquiry or request for information with respect to an acquisition proposal or that is reasonably likely to lead to an acquisition proposal and (b) to keep the other party reasonably informed on a current basis (and in any event, within 48 hours) as to the status of any acquisition proposal, including informing the other party of any material change to such acquisition proposal’s terms, the status of any negotiations, and any change in its intentions. See “The Merger Agreement—No Solicitation of Acquisition Proposals.”

No Change of Recommendation (Page 214)

The merger agreement provides that, among other restrictions and subject to certain exceptions, neither the Bioventus board nor the Misonix board may (a) withhold, withdraw, modify, amend or qualify (or publicly propose to do so), in a manner adverse the other party, the Bioventus board’s recommendation to Bioventus stockholders to approve the share issuance or the Misonix board’s recommendation to Misonix stockholders to adopt the merger agreement, as applicable, or (b) approve, recommend or declare advisable (or publicly propose to do so) any acquisition proposal.

Notwithstanding the restrictions described above, at any time prior to obtaining the approval by Bioventus stockholders of the Bioventus share issuance proposal or by Misonix stockholders of the Misonix merger proposal, as the case may be, the Bioventus board or the Misonix board, as applicable, may make a change of recommendation and/or terminate the merger agreement to concurrently enter into a definitive agreement with respect to an acquisition proposal if it determines in good faith (after consultation with its outside legal counsel and financial advisor) that such acquisition proposal is a superior proposal and that failure to take such action with respect to such acquisition proposal would reasonably be expected to be inconsistent with the such board of directors’ fiduciary duties to such party and its stockholders under applicable laws (and subject to compliance with certain obligations set forth in the merger agreement, including providing the other party with prior notice and the opportunity to negotiate for a period to make such acquisition proposal no longer a superior proposal and payment of a the applicable termination fee in connection with any such termination of the merger agreement).

In addition, the Bioventus board or the Misonix board, as the case may be, is permitted under certain circumstances, prior to obtaining stockholder approval of the Bioventus share issuance proposal, in the case of Bioventus, or the Misonix merger proposal, in the case of Misonix, and subject to compliance with certain obligations set forth in the merger agreement (including providing the other party with prior notice and the opportunity to negotiate during such notice period to amend the terms of the merger agreement) to make a change of recommendation in response to an intervening event (unrelated to an acquisition proposal) if the Bioventus board or the Misonix board, as applicable, determines in good faith (after consultation with its outside legal counsel and financial advisor) that the failure to do so would be reasonably likely to be inconsistent with its fiduciary duties. See “The Merger Agreement—No Change of Recommendation.”

Termination of the Merger Agreement (Page 225)

The merger agreement may be terminated:

 

   

by mutual written consent of Bioventus and Misonix at any time prior to the effective time;

 

   

by either Bioventus or Misonix, if the merger has not been consummated at or prior to the end date, provided, that the end date will be automatically extended in the event the only closing condition not satisfied or waived is the condition related to antitrust laws (however, a party may not terminate the merger agreement if such party’s material breach of any of its obligations under the merger agreement materially contributed to the failure of the closing to have occurred by the end date);

 

   

by either Bioventus or Misonix at any time prior to the effective time if a relevant legal restraint permanently preventing, enjoining or making illegal the consummation of the mergers shall have


 

31


Table of Contents
 

become final and non-appealable; provided, that the party seeking to terminate the merger agreement must have used reasonable best efforts to prevent the entry of and to remove such relevant legal restraint in accordance with the merger agreement;

 

   

by Bioventus at any time prior to Misonix obtaining its required stockholder approval, if the Misonix board has made a change in recommendation or Misonix has willfully breached in any material respect the covenants applicable to it regarding non-solicitation, special meetings and changes in recommendation;

 

   

by Misonix at any time prior to Bioventus obtaining its required stockholder approval, if (a) the Bioventus board has made a change in recommendation, (b) Bioventus has willfully breached in any material respect the covenants applicable to it regarding non-solicitation, special meetings and changes in recommendation or (c) if Bioventus has materially breached its representations and warranties regarding financing and solvency under the merger agreement or its covenants regarding financing and financing cooperation under the merger agreement, and (i) any such breach is not cured by the earlier of the end date or prior to the twentieth business day after Misonix gives written notice of such breach to Bioventus, (ii) all of the conditions, the satisfaction or waiver of which would be necessary to trigger the obligation of Bioventus to consummate the mergers (not including the condition related to the certificate to be provided by Misonix), have been satisfied and continue to be satisfied (other than those conditions that by their nature cannot be satisfied other than at the closing), (iii) Misonix has committed to Bioventus that Misonix is ready, willing and able to consummate the transactions contemplated by the merger agreement, and (iv) Bioventus, Merger Sub I or Merger Sub II fails to consummate the transactions contemplated by the merger agreement by the earlier of the end date or within two business days following the written notice delivered by Misonix to Bioventus following the expiration of the cure period specified above;

 

   

by Misonix, if prior to obtaining its required stockholder approval, (a) the Misonix board has authorized Misonix to enter into a definitive agreement relating to a superior proposal in material compliance with the merger agreement and (b) substantially concurrently with the termination of the merger agreement, Misonix enters into the definitive agreement relating to a superior proposal and pays Bioventus the applicable termination fee pursuant to the merger agreement;

 

   

by either Bioventus or Misonix, if the approval by Misonix stockholders of the Misonix merger proposal has not been obtained after a vote on approval of such proposal has been taken at the Misonix special meeting (including any postponement or adjournment thereof);

 

   

by either Bioventus or Misonix, if the approval by Bioventus stockholders of the Bioventus share issuance proposal has not been obtained after a vote on approval of such proposal has been taken at the Bioventus special meeting (including any postponement or adjournment thereof);

 

   

by Bioventus (a) if any of Misonix’s representations and warranties contained in the merger agreement are inaccurate such that the conditions to closing would not be satisfied or (b) if Misonix has breached any covenant in the merger agreement and such breach would result in the failure of a condition to closing, provided, that if an inaccuracy in any of Misonix’s representations and warranties or a breach of a covenant of Misonix is curable by Misonix by the end date and Misonix is continuing to exercise its reasonable best efforts to cure such inaccuracy or breach, then Bioventus may not terminate the merger agreement under this paragraph on account of such inaccuracy or breach unless such inaccuracy or breach shall remain uncured for a period of thirty business days commencing on the date that Misonix receives written notice of such inaccuracy or breach from Bioventus; provided, further, that Bioventus shall not have the right to terminate the merger agreement pursuant to this paragraph if Bioventus is then in breach of any of its representations, warranties or agreements contained in the merger agreement, which breach would give rise to the failure of a condition to closing; or


 

32


Table of Contents
   

by Misonix if: (a) any of Bioventus’, Merger Sub I’s or Merger Sub II’s representations and warranties contained in the merger agreement are inaccurate such that the conditions to closing would not be satisfied; or (b) any of Bioventus’ covenants contained in the merger agreement will have been breached such that the conditions to closing would not be satisfied; provided, however, that for purposes of clauses (a) and (b) above, if an inaccuracy in any of Bioventus’, Merger Sub I’s or Merger Sub II’s representations and warranties or a breach of a covenant of Bioventus is curable by Bioventus by the end date and Bioventus is continuing to exercise its reasonable best efforts to cure such inaccuracy or breach, then Misonix may not terminate the merger agreement under this paragraph on account of such inaccuracy or breach unless such inaccuracy or breach shall remain uncured for a period of thirty business days commencing on the date that Bioventus receives written notice of such inaccuracy or breach from Misonix; provided, further, that Misonix shall not have the right to terminate the merger agreement pursuant to this paragraph if Misonix is then in breach of any of its representations, warranties or agreements contained in the merger agreement, which breach would give rise to the failure of a condition to closing.

See “The Merger Agreement—Termination of the Merger Agreement.”

Termination Fees (Page 226)

Bioventus and Misonix have each agreed to pay a termination fee of $20,661,000 in cash (the “termination fee”) to the other party, if the merger agreement is terminated in certain circumstances involving a change of recommendation, breach of certain covenants of such party or termination of the merger agreement to enter into a superior proposal, in each case by the party obligated to pay the fee. Bioventus and Misonix are also required to pay the applicable termination fee if the party obligated to pay the termination fee enters into or consummates a superior proposal following certain terminations of the merger agreement, including a termination due to such party’s failure to obtain the required stockholder approval.

A termination fee will be payable by a party only once and not in duplication even though the termination fee may be payable by such party pursuant to multiple circumstances. Furthermore, except in the case of fraud or intentional and material breach of the merger agreement, if a party receives a termination fee, then the termination fee will be the recipient’s sole and exclusive remedy against the other party, its affiliates and its and their respective representatives in connection with the merger agreement. See “The Merger Agreement—Termination Fees.”

Accounting Treatment (Page 196)

Bioventus prepares its financial statements in accordance with GAAP. The mergers will be accounted for using the acquisition method of accounting under the provisions of Accounting Standards Codification (“ASC”) 805, Business Combinations, with Bioventus representing the accounting acquirer under this guidance. Bioventus will record assets acquired, including identifiable intangible assets, and liabilities assumed from Misonix at their respective fair values at the date of completion of the mergers. Any excess of the purchase price over the net fair value of such assets and liabilities will be recorded as goodwill.

The financial condition and results of operations of Bioventus after completion of the mergers will reflect Misonix after completion of the mergers, but will not be restated retroactively to reflect the historical financial condition or results of operations of Misonix. The earnings of Bioventus following completion of the mergers will reflect acquisition accounting adjustments, including the effect of changes in the carrying value for assets and liabilities on depreciation expense and amortization expense. Indefinite-lived intangible assets, including goodwill, will not be amortized but will be tested for impairment at least annually, and all tangible and intangible assets including goodwill will be tested for impairment when certain indicators are present. If, in the future, Bioventus determines that tangible or intangible assets (including goodwill) are impaired, Bioventus would record an impairment charge at that time.


 

33


Table of Contents

U.S. Federal Income Tax Consequences of the Mergers (Page 343)

For U.S. federal income tax purposes, the first merger and the second merger, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Assuming the mergers so qualify, a U.S. holder (as defined under “Material U.S. Federal Income Tax Consequences of the First Merger and Second Merger”) of Misonix common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of Misonix common stock for Bioventus class A common stock in the mergers, except with respect to cash received by Misonix stockholders in lieu of fractional shares of Bioventus common stock, but a U.S. holder of Misonix common stock generally will recognize any gain for U.S. federal income tax purposes upon the exchange of Misonix common stock for cash consideration.

See “Material U.S. Federal Income Tax Consequences of the First Merger and the Second Merger” for a more complete description of certain U.S. federal income tax consequences of the mergers. You are urged to consult your own tax advisor as to the specific tax consequences to you of the mergers in light of your particular circumstances.

Comparison of Stockholders’ Rights (Page 351)

Upon completion of the merger, Misonix stockholders receiving shares of Bioventus common stock will become Bioventus stockholders. The rights of Bioventus stockholders will be governed by the DGCL and the Bioventus charter and bylaws in effect at the effective time. As Bioventus and Misonix are both Delaware corporations, the rights of Bioventus and Misonix stockholders are not materially different. However, there are certain differences in the rights of Bioventus stockholders under the Bioventus charter and bylaws and of Misonix stockholders under the Misonix charter and bylaws. See “Comparison of Stockholders’ Rights.”

Listing of Bioventus Common Stock; Delisting and Deregistration of Misonix Common Stock (Page 197)

It is a condition to the merger that the shares of Bioventus common stock to be issued to Misonix stockholders in the merger be approved for listing on Nasdaq, subject to official notice of issuance. If the transaction is completed, Misonix common stock will be delisted from Nasdaq and deregistered under the Exchange Act, following which Misonix will no longer be required to file periodic reports with the SEC with respect to Misonix common stock.

Misonix has agreed to cooperate with Bioventus prior to the closing to cause the Misonix common stock to be delisted from Nasdaq and be deregistered under the Exchange Act as soon as practicable after the effective time.

Risk Factors (Page 39)

In evaluating the merger agreement, the merger and the share issuance, you should carefully read this joint proxy statement/prospectus and give special consideration to the factors discussed under “Risk Factors.”

Recent Developments

On July 15, 2020, BV LLC made a $15.0 million equity investment in CartiHeal (2009) Ltd. (“CartiHeal”), a privately-held company headquartered in Israel and developer of the proprietary Agili-C implant for the treatment of joint surface lesions in traumatic and osteoarthritic joints. Concurrent with the July 15, 2020 investment, BV LLC entered into an Option and Equity Purchase Agreement with CartiHeal and its shareholders, which provides BV LLC with an exclusive option to acquire 100% of CartiHeal’s shares, or the Call Option, and provides CartiHeal with a put option that would require BV LLC to purchase 100% of CartiHeal’s shares under certain conditions, or the Put Option. The Call Option is exercisable by BV LLC at any time. The Put Option is


 

34


Table of Contents

only exercisable by CartiHeal upon pivotal clinical trial success, including achievement of certain secondary endpoints and FDA approval of the Agili-C device with a label consistent in all respects with pivotal clinical trial success. If not previously exercised, the Call Option and the Put Option terminate 45 days following FDA approval of Agili-C (subject to final review by BV LLC of updated disclosures by CartiHeal). Should the Put Option or Call Option be exercised and the acquisition of CartiHeal consummated, consideration for the acquisition of all of the shares of CartiHeal pursuant to the Option and Equity Purchase Agreement would be $350.0 million in cash, subject to customary adjustments, all of which would be payable at closing, with an additional $150.0 million payable upon achievement of certain sales milestones related to Agili-C.

On August 27, 2021, the Bioventus board, after its review of the statistical report for CartiHeal’s pivotal clinical trial and determination that the results of the statistical report indicated a Pivotal Clinical Trial Success (as contemplated by the Option and Equity Purchase Agreement), approved BV LLC’s continued pursuit of a potential acquisition of CartiHeal. BV LLC thereafter deposited $50.0 million in escrow in accordance with the terms of the Option and Equity Purchase Agreement. Should the Put Option or Call Option be exercised and the acquisition of CartiHeal consummated, the escrowed funds will be applied towards the consideration payable by BV LLC pursuant to the Option and Equity Purchase Agreement. The closing of the transaction is subject to, among other things (including customary closing conditions), the valid exercise of the Call Option or the Put Option. CartiHeal plans to submit the clinical module of their PMA later this year, and the decision from the FDA is expected in the second half of 2022.

Litigation Relating to the Merger (Page 197)

On September 15, 2021, a purported stockholder of Misonix filed an action in the United States District Court for the Eastern District of New York, captioned Stein v. Misonix, Inc., et al., Case No. 2:21-cv-05127 (E.D.N.Y) (the “Stein Complaint”). The Stein Complaint names Misonix and members of its board of directors as defendants. On September 16, 2021, another purported stockholder of Misonix filed an action in the United States District Court for the Southern District of New York, captioned Ciccotelli v. Misonix, Inc. et al., Case No. 1:21-cv-07773 (S.D.N.Y.) (the “Ciccotelli Complaint”). The Ciccotelli Complaint names Misonix, members of its board of directors, Bioventus, Merger Sub I, and Merger Sub II as defendants. Both complaints assert claims under Section 14(a) and Section 20(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder, challenging the adequacy of disclosures in the proxy statement/prospectus filed with the SEC on September 8, 2021, regarding Misonix’s and Bioventus’ projections and J.P. Morgan’s financial analysis. The complaints seek, among other relief, (i) injunctive relief preventing the parties from proceeding with the merger, (ii) rescission in the event that the merger is consummated, and (iii) an award of costs, including attorneys’ and experts’ fees. More information can be found under “The Merger—Litigation Relating to the Merger.”


 

35


Table of Contents

MARKET PRICE AND DIVIDEND INFORMATION

Bioventus Class A Common Stock

Bioventus class A common stock is currently listed on The Nasdaq Global Select Market under the symbol “BVS.”

The closing price of Bioventus class A common stock on July 28, 2021, the trading day immediately prior to the public announcement of the Merger on July 29, 2021, as reported on The Nasdaq Global Select Market, was $17.15 per share.

Because the market price of Bioventus class A common stock is subject to fluctuation, the market value of the shares of Bioventus class A common stock that Misonix stockholders who elect the stock election consideration will be entitled to receive in the first merger may increase or decrease.

As of September 22, 2021, the record date for the Bioventus special meeting, there were approximately 8 holders of record of Bioventus class A common stock.

Dividends

Bioventus has never declared or paid any cash dividends on Bioventus class A common stock and does not anticipate paying cash dividends on Bioventus class A common stock for the foreseeable future. Notwithstanding the foregoing, any determination to pay cash dividends subsequent to the mergers will be at the discretion of the combined company’s then-current board of directors and will depend upon a number of factors, including the combined company’s results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors the then-current board of directors deems relevant.

 

36


Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part, the documents that Bioventus and Misonix refer you to in the registration statement and oral statements made or to be made by Bioventus and Misonix include certain “forward-looking statements” within the meaning of, and subject to the safe harbor created by, Section 27A of the Securities Act, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995, which are referred to as the “safe harbor provisions.” Statements contained or incorporated by reference in the registration statement of which this joint proxy statement/prospectus forms a part that are not historical facts are forward-looking statements, including statements about the beliefs and expectations of Bioventus and Misonix management relating to the merger and future financial condition and performance. Words such as “believe,” “continue,” “could,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements that are intended to be covered by the safe harbor provisions. Investors are cautioned that any forward-looking statements are subject to known and unknown risks and uncertainties, many of which are beyond the control of both companies, and which may cause actual results and future trends to differ materially from those matters expressed in, or implied or projected by, such forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus. Although these forward-looking statements are based on assumptions that Bioventus and Misonix management, as applicable, believe to be reasonable, they can give no assurance that these expectations will prove to be correct. Investors are cautioned not to place undue reliance on these forward-looking statements. Among the risks and uncertainties that could cause actual results to differ from those described in forward-looking statements are the following:

 

   

the occurrence of any change, event, series of events or circumstances that could give rise to the termination of the merger agreement, including a termination of the merger agreement under circumstances that could require Bioventus to pay a termination fee to Misonix or require Misonix to pay a termination fee to Bioventus;

 

   

uncertainties related to the timing of the receipt of required regulatory approvals for the merger and the possibility that Bioventus and Misonix may be required to accept conditions that could reduce or eliminate the anticipated benefits of the merger as a condition to obtaining regulatory approvals or that the required regulatory approvals might not be obtained at all;

 

   

the price of Bioventus and Misonix common stock could change before the completion of the merger, including as a result of uncertainty as to the long-term value of the common stock of the combined company or as a result of broader stock market movements;

 

   

the possibility that the parties are unable to complete the merger due to the failure of Bioventus stockholders to approve the share issuance or of Misonix stockholders to adopt the merger agreement, or the failure to satisfy any of the other conditions to the completion of the merger, or unexpected delays in satisfying any conditions;

 

   

delays in closing, or the failure to close, the merger for any reason, could negatively impact Bioventus, Misonix or the combined company;

 

   

risks that the pendency or completion of the merger and the other transactions contemplated by the merger agreement disrupt current plans and operations, which may adversely impact Bioventus’s or Misonix’s respective businesses;

 

   

difficulties or delays in integrating the businesses of Bioventus and Misonix following completion of the merger or fully realizing the anticipated synergies or other benefits expected from the merger;

 

   

certain restrictions during the pendency of the proposed merger that may impact the ability of Bioventus or Misonix to pursue certain business opportunities or strategic transactions;

 

   

the risk of legal proceedings that have been or may be instituted against Bioventus, Misonix, their directors and/or others relating to the merger;

 

37


Table of Contents
   

risks related to the diversion of the attention and time of Bioventus or Misonix management from ongoing business concerns;

 

   

the risk that the proposed merger or any announcement relating to the proposed merger could have an adverse effect on the ability of Bioventus or Misonix to retain and hire key personnel or maintain relationships with customers, suppliers, distributors, vendors, strategic partners or other third parties, including regulators and other governmental authorities or agencies, or on Bioventus’s or Misonix’s respective operating results and businesses generally;

 

   

the potentially significant amount of any costs, fees, expenses, impairments or charges related to the merger;

 

   

the potential dilution of Bioventus and Misonix stockholders’ ownership percentage of the combined company as compared to their ownership percentage of Bioventus or Misonix, as applicable, prior to the merger;

 

   

the business, economic, political and other conditions in the countries in which Bioventus or Misonix operate;

 

   

events beyond the control of Bioventus and Misonix, such as acts of terrorism or the continuation or worsening of the COVID-19 pandemic and changes in applicable law, including changes in Bioventus’s or Misonix’s estimates of their expected tax rate based on current tax law;

 

   

the potential dilution of the combined company’s earnings per share as a result of the merger;

 

   

Bioventus and Misonix directors and executive officers having interests in the merger that are different from, or in addition to, the interests of Bioventus and Misonix stockholders generally; and

 

   

the possibility that the combined company’s results of operations, cash flows and financial position after the merger may differ materially from the unaudited pro forma condensed combined financial information contained in this proxy statement/prospectus.

For further discussion of these and other risks, contingencies and uncertainties applicable to Bioventus and Misonix, their respective businesses and the proposed merger, see “Risk Factors” in this joint proxy statement/prospectus and in similarly titled sections in Bioventus’s and Misonix’s other filings with the SEC that are incorporated by reference herein. See “Where You Can Find More Information.”

All subsequent written or oral forward-looking statements attributable to Bioventus, Misonix or any person acting on either of their behalf are expressly qualified in their entirety by these cautionary statements. Neither Bioventus nor Misonix is under any obligation to update, alter or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise, and each expressly disclaims any obligation to do so, except as may be required by law.

 

38


Table of Contents

RISK FACTORS

In considering how to vote on the proposals to be considered and voted on at the Bioventus and Misonix special meetings, you are urged to carefully consider all of the information contained or incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information.” You should also read and consider the risks associated with each of the businesses of Bioventus and Misonix because those risks will affect the combined company. The risks associated with the business of Bioventus are presented below and the risks associated with the business of Misonix can be found in Misonix Annual Report on Form 10-K for the fiscal year ended June 30, 2021, as such risks may be updated or supplemented in Misonix’s subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (excluding any information and exhibits furnished under Item 2.02 or 7.01 thereof), each of which is incorporated by reference in this joint proxy statement/prospectus. In addition, you are urged to carefully consider the following material risks relating to the merger and the businesses of Bioventus, Misonix and the combined company.

Risk Factor Summary

Risks Relating to the Mergers

 

   

Because the exchange ratio is fixed and will not be adjusted in the event of any change in the price of either Bioventus or Misonix common stock, the value of the consideration that Misonix stockholders will receive in the first merger is uncertain.

 

   

The market price of Bioventus common stock will continue to fluctuate after the mergers.

 

   

The mergers may not be completed and the merger agreement may be terminated in accordance with its terms.

 

   

The termination of the merger agreement could negatively impact Bioventus or Misonix and the trading prices of the Bioventus or Misonix common stock.

Risks Relating to the Combined Company

 

   

Combining the businesses of Bioventus and Misonix may be more difficult, costly or time-consuming than expected and the combined company may fail to realize the anticipated benefits of the merger, which may adversely affect the combined company’s business results and negatively affect the value of the combined company’s common stock.

 

   

The failure to successfully integrate the businesses and operations of Bioventus and Misonix in the expected time frame may adversely affect the combined company’s future results.

 

   

The combined company may not be able to retain customers, suppliers or distributors, or customers, suppliers or distributors may seek to modify contractual relationships with the combined company, which could have an adverse effect on the combined company’s business and operations. Third parties may terminate or alter existing contracts or relationships with Bioventus or Misonix.

 

   

The combined company may be exposed to increased litigation, which could have an adverse effect on the combined company’s business and operations.

 

   

The Bioventus and Misonix unaudited prospective financial information is inherently subject to uncertainties, the unaudited pro forma condensed combined financial information included in this document is preliminary and the combined company’s actual financial position and results of operations after the transaction may differ materially from these estimates and the unaudited pro forma condensed combined financial information included in this joint proxy statement/prospectus. The unaudited pro forma condensed combined financial information does not reflect the effect of any divestitures that may be required in connection with the transaction.

 

39


Table of Contents

Risks Relating to Bioventus

 

   

Bioventus’ business may continue to experience adverse impacts as a result of the COVID-19 pandemic.

 

   

Bioventus is highly dependent on a limited number of products.

 

   

Bioventus’ long-term growth depends on its ability to develop, acquire and commercialize new products, line extensions or expanded indications.

 

   

Bioventus may be unable to successfully commercialize newly developed or acquired products or therapies in the United States.

 

   

Bioventus’ products and operations are subject to extensive governmental regulation, and its failure to comply with applicable requirements could cause its business to suffer.

 

   

Bioventus may be subject to enforcement action if it engages in improper claims submission practices and resulting audits or denials of Bioventus’ claims by government agencies could reduce Bioventus’ net sales or profits.

 

   

The FDA regulatory process is expensive, time-consuming and uncertain, and the failure to obtain and maintain required regulatory clearances and approvals could prevent Bioventus from commercializing its products.

 

   

Protection of Bioventus’ intellectual property rights may be difficult and costly, and Bioventus’ inability to protect its intellectual property could adversely affect its competitive position.

 

   

Bioventus depends on certain technologies that are licensed to it. Bioventus does not control the intellectual property rights covering these technologies and any loss of Bioventus’ rights to these technologies or the rights licensed to Bioventus could prevent Bioventus from selling Bioventus’ products, which could adversely impact its business, results of operations and financial condition.

 

   

In the past, Bioventus identified material weaknesses in its internal control over financial reporting. If Bioventus experiences additional material weaknesses in the future or otherwise fails to maintain an effective system of internal controls, Bioventus may not be able to accurately or timely requirements applicable to public companies, which may adversely affect investor confidence in Bioventus, and, as a result, the market price of Bioventus class A common stock.

 

   

Bioventus is a “controlled company” within the meaning of Nasdaq listing standards and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

 

   

Bioventus’ principal asset is Bioventus’ interest in BV LLC, and, accordingly, Bioventus depends on distributions from BV LLC to pay Bioventus’ taxes and expenses, including payments under the Tax Receivable Agreement. BV LLC’s ability to make such distributions may be subject to various limitations and restrictions.

 

   

The TRA with Smith & Nephew, Inc. (“the continuing LLC owner”) requires Bioventus to make cash payments to it in respect of certain tax benefits to which Bioventus is or may become entitled, and Bioventus expects that the payments it will be required to make could be significant.

 

   

Taking advantage of the reduced disclosure requirements applicable to “emerging growth companies” may make Bioventus class A common stock less attractive to investors.

 

40


Table of Contents

Risks Relating to the Mergers

Because the exchange ratio is fixed and will not be adjusted in the event of any change in the price of either Bioventus or Misonix common stock, the value of the consideration that Misonix stockholders will receive in the first merger is uncertain.

Upon completion of the first merger, each issued and outstanding share of Misonix common stock (other than treasury shares and shares held by Bioventus, Merger Sub I or Merger Sub II and shares held by Misonix stockholders who have not voted in favor of the Misonix merger proposal and prefected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be converted into the right to receive either an amount in cash equal to $28.00 or 1.6839 validly issued, fully paid and non-assessable shares of Bioventus class A common stock, based on the election of the holder thereof and subject to proration in accordance with the terms of the merger agreement. Bioventus stockholders will continue to own their existing shares of Bioventus common stock. The exchange ratio for the stock election consideration is fixed in the merger agreement and will not be adjusted for changes in the market price of either Bioventus or Misonix common stock prior to the completion of the mergers. The market prices of Bioventus and Misonix common stock have fluctuated prior to and after the date of the announcement of the merger agreement and will continue to fluctuate from the date of this joint proxy statement/prospectus to the dates of the Bioventus and Misonix special meetings, and through the date the mergers are consummated.

Because the exchange ratio is fixed, the market value of the stock election consideration to Misonix stockholders will fluctuate with the market price of the Bioventus class A common stock and will not be known at the time that Misonix stockholders vote on the mergers. Similarly, Bioventus stockholders will not know or be able to determine at the time of the Bioventus special meeting the market value of the shares of Bioventus common stock to be issued to those Misonix stockholders receiving the stock election consideration pursuant to the merger agreement compared to the market value of the shares of Misonix common stock that are being exchanged in the first merger.

Stock price changes may result from a variety of factors, including, among others, general market and economic conditions, changes in Bioventus’ or Misonix’s respective businesses, operations and prospects, the uncertainty as to the extent of the duration, scope and impact of the COVID-19 pandemic, market assessments of the likelihood that the mergers will be completed, interest rates, general market, industry and economic conditions and other factors generally affecting the respective prices of Bioventus and Misonix common stock, federal, state and local legislation, governmental regulation and legal developments in the industry segments in which Bioventus and Misonix operate, and the timing of the mergers and receipt of required regulatory approvals.

Many of these factors are beyond the control of Bioventus and Misonix, and neither Bioventus nor Misonix is permitted to terminate the merger agreement solely due to a decline in the market price of the common stock of the other party. You are urged to obtain current market quotations for Bioventus and Misonix common stock in determining whether to vote in favor of the Bioventus share issuance proposal, in the case of Bioventus stockholders, or the Misonix merger proposal, in the case of Misonix stockholders.

The market price of Bioventus common stock will continue to fluctuate after the mergers.

Upon completion of the first merger, Misonix stockholders who receive the stock election consideration will become holders of Bioventus common stock. The market price of the common stock of the combined company will continue to fluctuate, potentially significantly, following completion of the mergers, including for the reasons described above. As a result, former Misonix stockholders could lose some or all of the value of their investment in Bioventus common stock. In addition, any significant price or volume fluctuations in the stock market generally could have a material adverse effect on the market for, or liquidity of, the Bioventus common stock received in the first merger, regardless of the combined company’s actual operating performance.

The mergers may not be completed and the merger agreement may be terminated in accordance with its terms.

The mergers are subject to a number of conditions that must be satisfied, including the approval by Bioventus stockholders of the Bioventus share issuance proposal and approval by Misonix stockholders of the Misonix

 

41


Table of Contents

merger proposal, or waived (to the extent permitted), in each case prior to the completion of the mergers. These conditions are described under “The Merger Agreement—Conditions to the Completion of the Mergers.” These conditions to the completion of the mergers, some of which are beyond the control of Bioventus and Misonix, may not be satisfied or waived in a timely manner or at all, and, accordingly, the merger may be delayed or not completed.

Additionally, either Bioventus or Misonix may terminate the merger agreement under certain circumstances, including, among other reasons, if the mergers are not completed by the end date. Under the merger agreement, Bioventus and Misonix will each be required to pay a termination fee of $20,661,000 to the other party if the merger agreement is terminated in certain circumstances, including if the respective party’s board changes its recommendation in connection with the mergers. Additionally, Misonix may terminate the merger agreement if it enters into an alternative acquisition agreement with respect to a superior proposal and pays Bioventus the termination fee. See “The Merger Agreement—Termination of the Merger Agreement” and “The Merger Agreement—Termination Fee” for a more complete discussion of the circumstances under which the merger agreement could be terminated and when a termination fee may be payable by Bioventus or Misonix.

The termination of the merger agreement could negatively impact Bioventus or Misonix and the trading prices of the Bioventus or Misonix common stock.

If the mergers are not completed for any reason, including because Bioventus stockholders fail to approve the Bioventus share issuance proposal or because Misonix stockholders fail to approve the Misonix merger proposal, the ongoing businesses of Bioventus and Misonix may be adversely affected and, without realizing any of the expected benefits of having completed the mergers, Bioventus and Misonix would be subject to a number of risks, including the following:

 

   

each company may experience negative reactions from the financial markets, including negative impacts on its stock price;

 

   

each company may experience negative reactions from its customers, suppliers, distributors and employees;

 

   

each company will be required to pay its respective costs relating to the mergers, such as financial advisory, legal, financing and accounting costs and associated fees and expenses, whether or not the mergers are completed;

 

   

the merger agreement places certain restrictions on the conduct of each company’s business prior to completion of the mergers and such restrictions, the waiver of which is subject to the consent of the other company (not to be unreasonably withheld, conditioned or delayed), which may have prevented Bioventus and Misonix from taking actions during the pendency of the mergers that would have been beneficial (see “The Merger Agreement—Conduct of Business Prior to Completion of the Mergers” for a description of the restrictive covenants applicable to Bioventus and Misonix); and

 

   

matters relating to the mergers (including integration planning) will require substantial commitments of time and resources by Bioventus and Misonix management, which could otherwise have been devoted to day-to-day operations or to other opportunities that may have been beneficial to Bioventus or Misonix, as applicable, as an independent company.

The market price for shares of Bioventus common stock may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market prices of shares of Bioventus or Misonix common stock.

Upon consummation of the first merger, Bioventus stockholders and the Misonix stockholders who receive the stock election consideration will both hold shares of common stock in the combined company. Bioventus’ businesses differ from those of Misonix, and Misonix’s businesses differ from those of Bioventus, and,

 

42


Table of Contents

accordingly, the results of operations of the combined company will be affected by some factors that are different from those currently or historically affecting the results of operations of Bioventus and Misonix. The results of operations of the combined company may also be affected by factors different from those that currently affect or have historically affected either Bioventus or Misonix. For a discussion of the businesses of each of Bioventus and Misonix and some important factors to consider in connection with those businesses, see “The Parties to the Mergers” and the other information contained or incorporated in this joint proxy statement/prospectus. See “Where You Can Find More Information.”

Based on the number of shares of Misonix common stock outstanding as of September 1, 2021, the latest practicable date prior to the date of this joint proxy statement/prospectus, it is expected that Bioventus will issue approximately 18,322,984 million shares of Bioventus common stock in the first merger. Former Misonix stockholders may decide not to hold the shares of Bioventus common stock that they will receive in the first merger, and Bioventus stockholders may decide to reduce their investment in Bioventus as a result of the changes to Bioventus’ investment profile as a result of the transaction. Such sales of Bioventus common stock could have the effect of depressing the market price for Bioventus common stock.

The shares of common stock of the combined company to be received by Misonix stockholders as a result of the first merger will have rights different from the shares of Misonix common stock.

Upon completion of the transaction, Misonix stockholders will no longer be stockholders of Misonix, but will instead become stockholders of Bioventus. As Bioventus and Misonix are both Delaware corporations, the rights of Bioventus and Misonix stockholders are not materially different. However, there are certain differences in the rights of Bioventus stockholders under Bioventus’ amended and restated certificate of incorporation, which is referred to as the “Bioventus charter,” and Bioventus’ amended and restated bylaws, which are referred to as the “Bioventus bylaws,” and of Misonix stockholders under Misonix’s amended and restated certificate of incorporation, which is referred to as the “Misonix charter,” and Misonix’s amended and restated bylaws, which are referred to as the “Misonix bylaws.” See “Comparison of Stockholders’ Rights” for a discussion of these rights.

After the transaction, Misonix stockholders will have a significantly lower ownership and voting interest in Bioventus than they currently have in Misonix and will exercise less influence over management and policies of the combined company.

Based on the number of shares of Bioventus and Misonix common stock outstanding on September 1, 2021, the latest practicable date prior to the date of this joint proxy statement/prospectus, upon completion of the first merger, former Misonix stockholders are expected to own approximately 25% of the outstanding shares of Bioventus common stock and Bioventus stockholders immediately prior to the first merger are expected to own approximately 75% of the outstanding shares of Bioventus common stock. Consequently, former Misonix stockholders will have less influence over the management and policies of the combined company than they currently have over the management and policies of Misonix.

Until the completion of the transaction or the termination of the merger agreement in accordance with its terms, Bioventus and Misonix are each prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to Bioventus, Misonix and/or their respective stockholders.

From and after the date of the merger agreement and prior to completion of the transaction, the merger agreement restricts Bioventus and Misonix from taking specified actions without the consent of the other party and requires that the business of each company and its respective subsidiaries be conducted in the ordinary course in all material respects. These restrictions may prevent Bioventus or Misonix, as applicable, from taking actions during the pendency of the transaction that would have been beneficial. Adverse effects arising from these restrictions during the pendency of the transaction could be exacerbated by any delays in consummation of the transaction or termination of the merger agreement. See “The Merger Agreement—Conduct of Business Prior to Completion of the Mergers.”

 

43


Table of Contents

Obtaining required approvals and satisfying closing conditions may prevent or delay completion of the transaction.

The transaction is subject to a number of conditions to closing as specified in the merger agreement. These closing conditions include, among others, the effectiveness of the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part registering the Bioventus common stock issuable pursuant to the merger agreement and the absence of any stop order or proceedings by the SEC with respect thereto, the expiration or earlier termination of any applicable waiting period (or any extension thereof), and the receipt of required approvals, under U.S. antitrust laws, approval for listing on Nasdaq of the shares of Bioventus common stock to be issued pursuant to the merger agreement, and the absence of governmental restraints or prohibitions preventing the consummation of the transaction. To the extent required, foreign investment filings will also be made, though these are not closing conditions. The obligation of each of Bioventus and Misonix to consummate the transaction is also conditioned on, among other things, the truth and accuracy of the representations and warranties made by the other party on the date of the merger agreement and on the closing date (subject to certain materiality and material adverse effect qualifiers), and the performance by the other party in all material respects of its obligations under the merger agreement. No assurance can be given that the required stockholder, governmental and regulatory consents and approvals will be obtained or that the required conditions to closing will be satisfied, and, if all required consents and approvals are obtained and the required conditions are satisfied, no assurance can be given as to the terms, conditions and timing of such consents and approvals. Any delay in completing the transaction could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that Bioventus and Misonix expect to achieve if the transaction is successfully completed within its expected time frame. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the transaction, see “The Merger Agreement—Conditions to the Completion of the Mergers.”

Bioventus and Misonix must obtain certain regulatory approvals and clearances to consummate the transaction, which, if delayed, not granted or granted with burdensome or unacceptable conditions, could prevent, substantially delay or impair consummation of the transaction, result in additional expenditures of money and resources or reduce the anticipated benefits of the transaction.

The completion of the transaction is subject to the termination or expiration of any applicable waiting period (or extension thereof) under the HSR Act, which occurred as of 11:59 p.m., Eastern Time, on September 13, 2021.

Under the HSR Act, the transaction may not be completed until Notification and Report Forms have been filed with the U.S. Federal Trade Commission, which is referred to as the “FTC,” and the U.S. Department of Justice, which is referred to as the “DOJ,” and the applicable waiting period (or any extension thereof) has expired or been terminated. A transaction requiring notification under the HSR Act may not be completed until the expiration of the applicable 30-day waiting period following the parties’ filing of their respective HSR notifications or the early termination of that waiting period, at the earliest. Each of Bioventus and Misonix filed an HSR notification with the FTC and the DOJ on August 12, 2021. Effective as of 11:59 p.m., Eastern Time, on September 13, 2021, the waiting period under the HSR Act expired with respect to the transactions contemplated by the merger agreement.

At any time before or after consummation of the transaction, notwithstanding the expiration or termination of the applicable waiting period under the HSR Act, the DOJ or the FTC, or any state, could take such action under competition laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the transaction, seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or to terminate existing relationships and contractual rights. Under certain circumstances, private parties may also seek to take legal action against the transaction under competition laws.

There is no assurance that Bioventus and Misonix will obtain all required regulatory clearances or approvals on a timely basis, or at all. Failure to obtain the necessary clearances in any of these jurisdictions could substantially delay or prevent the consummation of the transaction, which could negatively impact both Bioventus and Misonix.

 

44


Table of Contents

Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the transaction.

The success of the transaction will depend in part on the combined company’s ability to retain the talents and dedication of the professionals currently employed by Bioventus and Misonix. It is possible that these employees may decide not to remain with Bioventus or Misonix, as applicable, while the transaction is pending, or with the combined company. If key employees terminate their employment, or if an insufficient number of employees are retained to maintain effective operations, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating Bioventus and Misonix to hiring suitable replacements, all of which may cause the combined company’s business to suffer. In addition, Bioventus and Misonix may not be able to locate suitable replacements for any key employees that leave either company or offer employment to potential replacements on reasonable terms. In addition, there could be disruptions to or distractions for the workforce and management, including disruptions associated with integrating employees into the combined company. No assurance can be given that the combined company will be able to attract or retain key employees of Bioventus and Misonix to the same extent that those companies have been able to attract or retain their own employees in the past.

The transaction, and uncertainty regarding the transaction, may cause customers, suppliers, distributors or strategic partners to delay or defer decisions concerning Bioventus or Misonix and adversely affect each company’s ability to effectively manage its respective business.

The transaction will happen only if the stated conditions are met, including the approval of the Bioventus share issuance proposal, the approval of the Misonix merger proposal and the receipt of required regulatory approvals, among other conditions. Many of the conditions are beyond the control of Bioventus and Misonix, and both parties also have certain rights to terminate the merger agreement. Accordingly, there may be uncertainty regarding the completion of the transaction. This uncertainty may cause customers, suppliers, distributors, vendors, strategic partners or others that deal with Bioventus or Misonix to delay or defer entering into contracts with Bioventus or Misonix or making other decisions concerning Bioventus or Misonix or seek to change or cancel existing business relationships with Bioventus or Misonix, which could negatively affect their respective businesses. Any delay or deferral of those decisions or changes in existing agreements could have an adverse impact on the respective businesses of Bioventus and Misonix, regardless of whether the transaction is ultimately completed.

In addition, the merger agreement restricts Bioventus, Misonix and their respective subsidiaries from taking certain actions during the pendency of the transaction without the consent of the other parties. These restrictions may prevent Bioventus and Misonix from pursuing attractive business opportunities or strategic transactions that may arise prior to the completion of the transaction. See “The Merger Agreement—Conduct of Business Prior to Completion of the Mergers” for a description of the restrictive covenants to which each of Bioventus and Misonix is subject.

The opinions rendered to Bioventus and Misonix from their respective financial advisors will not reflect changes in circumstances between the dates of such opinions and the completion of the transaction.

Perella Weinberg delivered its oral opinion to the Bioventus board on July 28, 2021, which opinion was subsequently confirmed in a written opinion dated as of July 29, 2021, to the effect that as of such date and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered in connection with the preparation of the opinion, the merger consideration to be paid by Bioventus pursuant to the merger agreement was fair, from a financial point of view, to Bioventus.

J.P. Morgan rendered its oral opinion to the Misonix board on July 28, 2021, which opinion was subsequently confirmed in writing dated as of July 29, 2021, to the effect that, as of such date and based on and subject to the assumptions made, procedures followed, matters considered and other limitations on the review undertaken by J.P. Morgan in preparing its opinion, the merger consideration to be paid to the holders of Misonix common

 

45


Table of Contents

stock in the merger was fair, from a financial point of view, to such holders, as more fully described in the section entitled “Opinion of Misonix’s Financial Advisor”. The full text of the written opinion of J.P. Morgan, dated July 29, 2021, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing its opinion, is attached as Annex C to this joint proxy statement/prospectus and is incorporated herein by reference.

Neither Bioventus nor Misonix has obtained, nor will either of them obtain, an updated opinion from Perella Weinberg or J.P. Morgan, as applicable, regarding the fairness, from a financial point of view, of the merger consideration or exchange ratio, including as of the date of this joint proxy statement/prospectus or of the special meetings, or prior to the completion of the transaction. Each of the respective opinions of Perella Weinberg and J.P. Morgan was necessarily based on general financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to Perella Weinberg and J.P. Morgan as applicable, only as of the dates of the respective opinions of Perella Weinberg and J.P. Morgan, and such opinions do not address the fairness of the merger consideration, from a financial point of view, at the time the transaction is completed. Changes in the operations and prospects of Bioventus or Misonix, general financial, economic, monetary, market and other conditions, circumstances and factors that may be beyond the control of Bioventus and Misonix, and on which each of the respective opinions of Perella Weinberg and J.P. Morgan was based, may alter the value of Bioventus or Misonix or the prices of shares of Bioventus or Misonix common stock by the time the mergers are completed. The opinions of Perella Weinberg and J.P. Morgan do not speak as of any date other than the respective dates of such opinions. The recommendation of the Bioventus board that Bioventus stockholders vote “FOR” the Bioventus share issuance proposal and “FOR” the Bioventus adjournment proposal and the recommendation of the Misonix board that Misonix stockholders vote “FOR” the Misonix merger proposal, “FOR” the Misonix compensation proposal and “FOR” the Misonix adjournment proposal are each made as of the date of this joint proxy statement/prospectus. For a description of the opinions that Bioventus and Misonix received from their respective financial advisors, see “The Merger—Opinion of Bioventus’ Financial Advisor” and “The Merger—Opinion of Misonix’s Financial Advisor.”

Whether or not the transaction is completed, the announcement and pendency of the mergers could cause disruptions in the businesses of Bioventus and Misonix, which could have an adverse effect on their respective businesses and financial results.

Whether or not the transaction is completed, the announcement and pendency of the mergers could cause disruptions in the businesses of Bioventus and Misonix, including by diverting the attention of Bioventus and Misonix management toward the completion of the transaction. In addition, Bioventus and Misonix have each diverted significant management resources in an effort to complete the transaction and are each subject to restrictions contained in the merger agreement on the conduct of their respective businesses. If the transaction is not completed, Bioventus and Misonix will have incurred significant costs, including the diversion of management resources, for which they will have received little or no benefit.

Misonix directors and executive officers have interests and arrangements that may be different from, or in addition to, those of Misonix stockholders generally.

When considering the recommendations of the Misonix board on how to vote on the proposals described in this joint proxy statement/prospectus, Misonix stockholders should be aware that Misonix directors and executive officers have interests in the transaction that are different from, or in addition to, those of Misonix stockholders generally. These interests include the continued service of certain Misonix directors as directors of the combined company, the treatment in the mergers of outstanding equity, equity-based and incentive awards, severance arrangements, other compensation and benefit arrangements, and the right to continued indemnification of former Misonix directors and officers by the combined company.

 

46


Table of Contents

Misonix stockholders should be aware of these interests when they consider the recommendations of the Misonix board that they vote to approve the Misonix merger proposal. The Misonix board was aware of and considered these interests when it determined that the transaction was fair to and in the best interests of Misonix and its stockholders, approved and declared advisable the merger agreement, and recommended that Misonix stockholders adopt the merger agreement. The interests of Misonix directors and executive officers are described in more detail under “Interests of Misonix Directors and Executive Officers in the Mergers.”

Bioventus or Misonix may waive one or more of the closing conditions without re-soliciting stockholder approval.

To the extent permitted by law, Bioventus or Misonix may determine to waive, in whole or part, one or more of the conditions to their respective obligations to consummate the mergers. Bioventus and Misonix currently expect to evaluate the materiality of any waiver and its effect on Bioventus or Misonix stockholders, as applicable, in light of the facts and circumstances at the time to determine whether any amendment of this joint proxy statement/prospectus or any re-solicitation of proxies is required in light of such waiver. Any determination as to whether to waive any condition to the transaction, and as to whether to re-solicit stockholder approval and/or amend this joint proxy statement/prospectus as a result of such waiver, will be made by Bioventus or Misonix, as applicable, at the time of such waiver based on the facts and circumstances as they exist at that time.

The merger agreement contains provisions that could discourage a potential competing acquirer that might be willing to pay more to acquire or merge with either Bioventus or Misonix.

The merger agreement contains “no shop” provisions that restrict the ability of Bioventus and Misonix to, among other things (each as described under “The Merger Agreement—No Solicitation of Acquisition Proposals”):

 

   

solicit, initiate, knowingly encourage, knowingly induce, knowingly assist, or knowingly facilitate any inquiries regarding, or the submission or announcement by any person of, any proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal;

 

   

furnish any information regarding Bioventus, Misonix or their respective subsidiaries in connection with, for the purpose of soliciting, initiating, encouraging or facilitating, or in response to, an acquisition proposal;

 

   

engage in or otherwise participate in any discussions or negotiations with any person with respect to any acquisition proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an acquisition proposal; or

 

   

approve, adopt, recommend, agree to, or enter into, or propose to approve, adopt, recommend, agree to, or enter into, any letter of intent or similar document, agreement, commitment, or agreement in principle with respect to any acquisition proposal.

Furthermore, there are only limited exceptions to the requirement under the merger agreement that neither the Bioventus nor Misonix boards of directors withdraw, modify, amend or qualify the Bioventus recommendation or the Misonix recommendation, as applicable (each as defined under “The Merger Agreement—Representations and Warranties”). Although the Bioventus or Misonix board is permitted to effect a change of recommendation, after complying with certain procedures set forth in the merger agreement, in response to a superior proposal or to an intervening event (if the applicable board of directors determines in good faith after consultation with its outside legal counsel and its financial advisor that a failure to do so would be reasonably likely to be inconsistent with its fiduciary duties under applicable law), such change of recommendation by the Misonix board would entitle Bioventus to terminate the merger agreement and collect a termination fee from Misonix. See “The Merger Agreement—Termination of the Merger Agreement” and “The Merger Agreement—Termination Fees.”

 

47


Table of Contents

These provisions could discourage a potential competing acquirer from considering or proposing an acquisition or merger, even if it were prepared to pay consideration with a higher value than that implied by the exchange ratio in the first merger, or might result in a potential competing acquirer proposing to pay a lower per share price than it might otherwise have proposed to pay because of the added expense of the termination fee.

The transaction will involve substantial costs.

Bioventus and Misonix have incurred and expect to incur non-recurring costs associated with combining the operations of the two companies, as well as transaction fees and other costs related to the transaction. As of the date of this joint proxy statement/prospectus, Bioventus and Misonix estimate that their aggregate costs associated with the transaction and related transactions will be approximately $18.0 million and $10.4 million, respectively. These costs include filing and registration fees with the SEC, printing and mailing costs associated with this joint proxy/registration statement, and legal, accounting, investment banking, consulting, public relations and proxy solicitation fees. These costs do not include severance and retention payments that may be made to certain Misonix employees and costs that will be incurred in connection with the integration of Bioventus’ and Misonix’s businesses. Some of these costs are payable by Bioventus or Misonix regardless of whether the transaction is completed.

The combined company will also incur restructuring and integration costs in connection with the mergers. The costs related to restructuring will be expensed as a cost of the ongoing results of operations of either Bioventus or the combined company. There are processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the mergers and the integration of Misonix’s business. Although Bioventus expects that the elimination of duplicative costs, strategic benefits, and additional income, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction, merger-related and restructuring costs over time, any net benefit may not be achieved in the near term or at all. Many of these costs will be borne by Bioventus even if the mergers are not completed. While Bioventus has assumed that certain expenses would be incurred in connection with the transaction, there are many factors beyond Bioventus’ control that could affect the total amount or the timing of the integration and implementation expenses.

Bioventus stockholders will not be entitled to appraisal rights in the transaction, though Misonix stockholders will be entitled to appraisal rights in the transaction.

Appraisal rights are statutory rights that, if applicable under law, enable stockholders of a corporation to dissent from an extraordinary transaction, such as a merger, and to demand that such corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to such stockholders in connection with the extraordinary transaction. Under the DGCL, stockholders generally do not have appraisal rights if the shares of stock they hold are either listed on a national securities exchange or held of record by more than 2,000 holders. Notwithstanding the foregoing, appraisal rights are available if stockholders are required by the terms of the merger agreement to accept for their shares anything other than (a) shares of stock of the surviving corporation, (b) shares of stock of another corporation that will either be listed on a national securities exchange or held of record by more than 2,000 holders, (c) cash in lieu of fractional shares or (d) any combination of the foregoing.

Because the mergers are of Merger Sub with and into Misonix and then Misonix with and into Merger Sub II and holders of Bioventus common stock will continue to hold their shares following completion of the mergers, holders of Bioventus common stock are not entitled to appraisal rights in connection with the mergers.

Pursuant to Section 262 of the DGCL, Misonix stockholders who do not vote in favor of Misonix merger proposal and who comply with the applicable requirements of Section 262 of the DGCL have the right to seek appraisal of such shares by the Delaware Court of Chancery and to receive payment in cash of the fair value of those shares. It is possible that the fair value as determined by the Delaware Court of Chancery may be more or less than, or the same as, the per share value of the merger consideration.

 

48


Table of Contents

Misonix stockholders who wish to preserve their appraisal rights must make a demand for appraisal prior to the time the Misonix stockholder vote is taken on the Misonix merger proposal. In addition to submitting a demand for appraisal, such Misonix stockholders must continuously hold such shares through the effective time, must not vote in favor of the Misonix merger proposal, must not surrender their shares in exchange for the merger consideration, and must otherwise follow the procedures prescribed by Section 262 of the DGCL.

Misonix stockholders are encouraged to read Section 262 of the DGCL carefully and in their entirety. Due to the complexity of the procedures for exercising your appraisal rights, Misonix stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to strictly comply with these provisions will result in the loss of appraisal rights. See the section entitled “Appraisal Rights” of this joint proxy statement/prospectus for additional information and the text of Section 262 of the DGCL reproduced in its entirety as Annex D to this proxy statement/prospectus. See “Appraisal Rights.”

Lawsuits filed against Bioventus and/or Misonix may delay or prevent the transaction from being completed.

Bioventus, Misonix and members of the Bioventus and Misonix boards of directors may in the future be parties, among others, to various claims and litigation related to the merger agreement and the merger, including putative shareholder class actions. See “The Mergers—Litigation Relating to the Mergers.” Among other remedies, the plaintiffs in such matters are seeking to enjoin the transaction. The results of complex legal proceedings are difficult to predict, and could prevent or delay the merger from being completed in a timely manner, and could result in substantial costs to Bioventus and Misonix, including, but not limited to, costs associated with the indemnification of their respective directors and officers. The existence of litigation relating to the merger could also impact the likelihood of obtaining the required approvals from either Bioventus or Misonix stockholders. Moreover, the pending litigation and any future additional litigation could be time consuming and expensive, could divert the attention of Bioventus and Misonix management away from their regular businesses and, if any one of these lawsuits is adversely resolved against either Bioventus or Misonix, could have a material adverse effect on Bioventus’ or Misonix’s respective financial condition.

One of the conditions to the completion of the mergers is that no relevant legal restraint (as defined in the merger agreement) will be in effect. As such, any relevant legal restraint may delay or prevent the mergers from becoming effective.

Risks Relating to the Combined Company

Combining the businesses of Bioventus and Misonix may be more difficult, costly or time-consuming than expected and the combined company may fail to realize the anticipated benefits of the merger, which may adversely affect the combined company’s business results and negatively affect the value of the combined company’s common stock.

The success of the mergers will depend on, among other things, the ability of Bioventus and Misonix to combine their businesses in a manner that facilitates growth opportunities and realizes expected cost savings. Bioventus and Misonix have entered into the merger agreement because each believes that the transaction is fair to and in the best interests of their respective stockholders and that combining the businesses of Bioventus and Misonix will produce benefits and cost savings. See “The Mergers—Recommendation of the Bioventus Board of Directors; Bioventus’ Reasons for the Mergers” and “The Mergers—Recommendation of the Misonix Board of Directors; Misonix’s Reasons for the Mergers.”

However, Bioventus and Misonix must successfully combine their respective businesses in a manner that permits these benefits to be realized. In addition, the combined company must achieve the anticipated growth and cost savings without adversely affecting current revenues and investments in future growth. If the combined company is not able to successfully achieve these objectives, the anticipated benefits of the transaction may not be realized fully, or at all, or may take longer to realize than expected.

 

49


Table of Contents

An inability to realize the full extent of the anticipated benefits of the transaction, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of the combined company, which may adversely affect the value of the common stock of the combined company.

In addition, the actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. Actual growth and cost savings, if achieved, may be lower than what Bioventus and Misonix expect and may take longer to achieve than anticipated. If Bioventus and Misonix are not able to adequately address integration challenges, they may be unable to successfully integrate their operations or realize the anticipated benefits of the integration of the two companies.

The failure to successfully integrate the businesses and operations of Bioventus and Misonix in the expected time frame may adversely affect the combined company’s future results.

Bioventus and Misonix have operated and, until the completion of the transaction, will continue to operate independently. There can be no assurances that their businesses can be integrated successfully. It is possible that the integration process could result in the loss of key Bioventus or Misonix employees, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated. Specifically, the following issues, among others, must be addressed in integrating the operations of Bioventus and Misonix in order to realize the anticipated benefits of the transaction so the combined company performs as expected:

 

   

combining the companies’ operations and corporate functions;

 

   

combining the businesses of Bioventus and Misonix and meeting the capital requirements of the combined company, in a manner that permits the combined company to achieve any cost savings or other synergies anticipated to result from the mergers, the failure of which would result in the anticipated benefits of the transaction not being realized in the time frame currently anticipated or at all;

 

   

integrating personnel from the two companies, especially in the COVID-19 environment which has required many employees to work remotely;

 

   

integrating the companies’ technologies and technologies licensed from third parties;

 

   

integrating and unifying the offerings and services available to customers;

 

   

identifying and eliminating redundant and underperforming functions and assets;

 

   

harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;

 

   

maintaining existing agreements with customers, suppliers, distributors and vendors, avoiding delays in entering into new agreements with prospective customers, suppliers, distributors and vendors, and leveraging relationships with such third parties for the benefit of the combined company;

 

   

addressing possible differences in business backgrounds, corporate cultures and management philosophies;

 

   

consolidating the companies’ administrative and information technology infrastructure;

 

   

coordinating distribution and marketing efforts;

 

   

managing the movement of certain positions to different locations;

 

   

coordinating geographically dispersed organizations; and

 

   

effecting actions that may be required in connection with obtaining regulatory or other governmental approvals.

 

50


Table of Contents

In addition, at times the attention of certain members of either company’s or both companies’ management and resources may be focused on completion of the transaction and the integration of the businesses of the two companies and diverted from day-to-day business operations or other opportunities that may have been beneficial to such company, which may disrupt each company’s ongoing business and the business of the combined company.

The combined company may not be able to retain customers, suppliers or distributors, or customers, suppliers or distributors may seek to modify contractual relationships with the combined company, which could have an adverse effect on the combined company’s business and operations. Third parties may terminate or alter existing contracts or relationships with Bioventus or Misonix.

As a result of the transaction, the combined company may experience impacts on relationships with customers, suppliers and distributors that may harm the combined company’s business and results of operations. Certain customers, suppliers or distributors may seek to terminate or modify contractual obligations following the transaction whether or not contractual rights are triggered as a result of the transaction. There can be no guarantee that customers, suppliers and distributors will remain with or continue to have a relationship with the combined company or do so on the same or similar contractual terms following the transaction. If any customers, suppliers or distributors seek to terminate or modify contractual obligations or discontinue the relationship with the combined company, then the combined company’s business and results of operations may be harmed. Furthermore, the combined company will not have long-term arrangements with many of its significant suppliers. If the combined company’s suppliers were to seek to terminate or modify an arrangement with the combined company, then the combined company may be unable to procure necessary supplies from other suppliers in a timely and efficient manner and on acceptable terms, or at all.

Bioventus and Misonix also have contracts with vendors, landlords, licensors and other business partners which may require Bioventus or Misonix, as applicable, to obtain consent from these other parties in connection with the transaction, or which may otherwise contain limitations applicable to such contracts following the transaction. If these consents cannot be obtained, the combined company may suffer a loss of potential future revenue, incur costs and lose rights that may be material to the combined company’s business. In addition, third parties with whom Bioventus or Misonix currently have relationships may terminate or otherwise reduce the scope of their relationship with either party in anticipation of the transaction. Any such disruptions could limit the combined company’s ability to achieve the anticipated benefits of the transaction. The adverse effect of any such disruptions could also be exacerbated by a delay in the completion of the transaction or by a termination of the merger agreement.

The combined company may be exposed to increased litigation, which could have an adverse effect on the combined company’s business and operations.

The combined company may be exposed to increased litigation from stockholders, customers, suppliers, distributors, consumers and other third parties due to the combination of Bioventus’ and Misonix’s businesses following the mergers. Such litigation may have an adverse impact on the combined company’s business and results of operations or may cause disruptions to the combined company’s operations.

 

51


Table of Contents

The Bioventus and Misonix unaudited prospective financial information is inherently subject to uncertainties, the unaudited pro forma condensed combined financial information included in this document is preliminary and the combined company’s actual financial position and results of operations after the transaction may differ materially from these estimates and the unaudited pro forma condensed combined financial information included in this joint proxy statement/prospectus. The unaudited pro forma condensed combined financial information does not reflect the effect of any divestitures that may be required in connection with the transaction.

The unaudited pro forma condensed combined financial information included in this joint proxy statement/prospectus is presented for illustrative purposes only, contains a variety of adjustments, assumptions and preliminary estimates and is not necessarily indicative of what the combined company’s actual financial position or results of operations would have been had the transaction been completed on the dates indicated. The combined company’s actual results and financial position after the transaction may differ materially and adversely from the unaudited pro forma condensed combined financial information included in this joint proxy statement/prospectus. The unaudited pro forma condensed combined financial information does not reflect the effect of any divestitures that may be required in connection with the transaction. See “Unaudited Pro Forma Condensed Combined Financial Statements.”

While presented with numeric specificity, the Bioventus and Misonix unaudited pro forma condensed combined financial information provided in this joint proxy statement/prospectus is based on numerous variables and assumptions (including, but not limited to, those related to industry performance and competition, general business, the semiconductor and related industries, and economic, market and financial conditions and additional matters specific to Bioventus’ or Misonix’s business, as applicable) that are inherently subjective and uncertain and are beyond the control of the respective management teams of Bioventus and Misonix. As a result, actual results may differ materially from the unaudited pro forma condensed combined financial information. Important factors that may affect actual results and cause these unaudited projected financial forecasts to not be achieved include, but are not limited to, risks and uncertainties relating to Bioventus’ or Misonix’s business, as applicable (including each company’s ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, general business and economic conditions. See “The Merger—Bioventus Unaudited Financial Projections,” “The Merger—Misonix Unaudited Financial Projections” and “The Merger—Certain Estimated Synergies.”

The combined company’s debt may limit its financial flexibility.

Bioventus and Misonix continue to review the treatment of their existing indebtedness. Bioventus and Misonix may seek to repay, refinance, repurchase, redeem, exchange or otherwise terminate their existing indebtedness prior to, in connection with or following the completion of the mergers. If either Bioventus or Misonix seeks to refinance its existing indebtedness, there can be no guarantee that it will be able to execute the refinancing on favorable terms or at all. Alternatively, Bioventus and Misonix may seek to leave all or a portion of their existing indebtedness outstanding as the primary obligation of the combined company or to incur additional indebtedness or refinancing indebtedness prior to, in connection with or following the completion of the mergers.

Bioventus’ or Misonix’s substantial indebtedness could have adverse effects on such company’s and/or the combined company’s financial condition and results of operations, including:

 

   

increasing its vulnerability to changing economic, regulatory and industry conditions;

 

   

limiting its ability to compete and its flexibility in planning for, or reacting to, changes in its business and the industry;

 

   

limiting its ability to pay dividends to its stockholders;

 

   

limiting its ability to borrow additional funds; and

 

52


Table of Contents
   

increasing its interest expense and requiring it to dedicate a substantial portion of its cash flow from operations to payments on its debt, thereby reducing funds available for working capital, capital expenditures, acquisitions, and share repurchases, dividends and other purposes.

The companies’ ability to arrange any additional financing for the purposes described above or otherwise will depend on, among other factors, the companies’ respective financial positions and performance, as well as prevailing market conditions and other factors beyond their control. The level and quality of the combined company’s earnings, operations, business and management, among other things, will impact the determination of the combined company’s credit ratings. A decrease in the ratings assigned to the combined company by the ratings agencies may negatively impact the combined company’s access to the debt capital markets and increase the combined company’s cost of borrowing. There can be no assurance that the combined company will be able to obtain financing on acceptable terms or at all. In addition, there can be no assurance that the combined company will be able to maintain the current creditworthiness or prospective credit ratings of Bioventus or Misonix, and any actual or anticipated changes or downgrades in such credit ratings may have a negative impact on the liquidity, capital position or access to capital markets of the combined company.

If the existing indebtedness of Bioventus and/or Misonix remains outstanding, or if either company refinances its existing indebtedness, covenants contained in the agreements governing such indebtedness will impose restrictions on the combined company and certain of its subsidiaries that may affect their ability to operate their businesses.

The agreements that govern the indebtedness of Bioventus and Misonix, in addition to any refinanced indebtedness, may contain various affirmative and negative covenants. Such covenants may, subject to certain significant exceptions, restrict the ability of the combined company and certain of its subsidiaries to, among other things, incur liens, incur debt, engage in mergers, consolidations and acquisitions, transfer assets outside the ordinary course of business, make loans or other investments, pay dividends, repurchase equity interests, make other payments with respect to equity interests, repay or repurchase subordinated debt and engage in affiliate transactions. In addition, the agreements governing the existing indebtedness of Bioventus and Misonix contain financial covenants that would require the combined company to maintain certain financial ratios under certain circumstances. The ability of the combined company and its subsidiaries to comply with these provisions may be affected by events beyond their control. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate the combined company’s repayment obligations.

Declaration, payment and amounts of dividends, if any, distributed to stockholders of the combined company will be uncertain.

Bioventus has not historically paid cash dividends on its capital stock. Whether any dividends are declared or paid to stockholders of the combined company, and the amounts of any such dividends that are declared or paid, are uncertain and depend on a number of factors. If dividends are paid to stockholders of the combined company, they may not be of the same amount as paid by Misonix to its stockholders prior to the mergers. The Bioventus board will have the discretion to determine the dividend policy of the combined company, including the amount and timing of dividends, if any, that the combined company may declare from time to time, which may be impacted by any of the following factors:

 

   

the combined company may not have enough cash to pay such dividends or to repurchase shares due to its cash requirements, capital spending plans, cash flow or financial position;

 

   

decisions on whether, when and in which amounts to make any future distributions will remain at all times entirely at the discretion of the Bioventus board, which could change its dividend practices at any time and for any reason;

 

   

the combined company’s desire to maintain or improve the credit ratings on its debt;

 

   

the amount of dividends that the combined company may distribute to its stockholders is subject to restrictions under Delaware law and is limited by restricted payment and leverage covenants in the

 

53


Table of Contents
 

combined company’s credit facilities and indentures and, potentially, the terms of any future indebtedness that the combined company may incur; and

 

   

certain limitations on the amount of dividends subsidiaries of the combined company can distribute to the combined company, as imposed by state law, regulators or agreements.

Stockholders should be aware that they have no contractual or other legal right to dividends that have not been declared.

The combined company is subject to risks arising from the ongoing COVID-19 pandemic.

The outbreak of COVID-19, which the World Health Organization declared a pandemic in March 2020, has spread across the globe and disrupted the global economy. Governmental actions to reduce the spread of COVID-19 have negatively impacted the macroeconomic environment in many ways, while the pandemic itself has significantly increased economic uncertainty and abruptly reduced economic activity.

The extent to which the COVID-19 pandemic will impact the combined company is highly uncertain and is difficult to predict. The pandemic’s effects and their extent will depend on various factors, including, but not limited to, the duration, scope and impact of the pandemic, restrictions on business and social distancing guidelines that may be requested or mandated by governmental authorities and how quickly and to what extent normal economic and operating conditions can resume. Relevant adverse consequences of the pandemic could include reduced liquidity, increased volatility of the combined company’s stock price, operational disruption or failure due to spread of disease within the combined company or due to restrictions on business and social distancing guidelines imposed or requested by governmental authorities, unavailability of raw materials, disruption in the supply chain and increased cybersecurity and fraud risks due to increased online and remote activity, as well as the adverse consequences of a macroeconomic slowdown, recession or depression.

Even after the COVID-19 pandemic has subsided, the combined company may continue to experience adverse impacts to its business as a result of the global economic impact of the COVID-19 pandemic, including reduced availability of credit, adverse impacts on liquidity and the negative financial effects from any recession or depression that may occur.

Any impairment of the combined company’s tangible, definite-lived intangible or indefinite-lived intangible assets, including goodwill, may adversely impact the combined company’s financial position and results of operations.

The mergers will be accounted for using the acquisition method of accounting under the provisions of ASC 805, Business Combinations, with Bioventus representing the accounting acquirer under this guidance. Bioventus will record assets acquired, including identifiable intangible assets, and liabilities assumed from Misonix at their respective fair values at the date of completion of the mergers. Any excess of the purchase price over the net fair value of such assets and liabilities will be recorded as goodwill. In connection with the mergers, the combined company is expected to record significant goodwill and other intangible assets on its consolidated balance sheet. See “Unaudited Pro Forma Condensed Combined Financial Statements.”

Indefinite-lived intangible assets, including goodwill, will be tested for impairment at least annually, and all tangible and intangible assets including goodwill will be tested for impairment when certain indicators are present. If, in the future, the combined company determines that tangible or intangible assets, including goodwill, are impaired, the combined company would record an impairment charge at that time. Impairment testing of goodwill and intangible assets requires significant use of judgment and assumptions, particularly as it relates to the determination of fair value. A decrease in the long-term economic outlook and future cash flows of the combined company’s business could significantly impact asset values and potentially result in the impairment of intangible assets, including goodwill, which may have a material adverse impact on the combined company’s financial position and results of operations.

 

54


Table of Contents

The Bioventus charter designates, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) as the exclusive forums for substantially all disputes between Bioventus and its stockholders, which will restrict the ability of stockholders of the combined company to choose the judicial forum for disputes with the combined company or its directors, officers or employees.

The Bioventus charter provides that, unless Bioventus consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for the following types of actions, suits or proceedings: (i) any derivative action, suit or proceeding brought on behalf of Bioventus; (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any current or former Bioventus director, officer, employee or stockholder to Bioventus or its stockholders; (iii) any action, suit or proceeding asserting a claim arising pursuant to any provision of the DGCL, the Bioventus charter, the Bioventus bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or (iv) any action, suit or proceeding asserting a claim governed by the internal affairs doctrine. Nothing in the Bioventus charter or the Bioventus bylaws would preclude stockholders that assert claims under the Exchange Act from bringing such claims in federal court to the extent the Exchange Act confers exclusive federal jurisdiction over such claims, subject to applicable law.

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. The Bioventus charter provides that the U.S. federal district courts are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. However, there is uncertainty as to whether a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act.

These forum selection provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the combined company or its directors, officers or other employees, which may discourage such lawsuits. While Delaware courts have determined that such forum selection provisions are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act against the combined company and its directors, officers or other employees in a venue other than in the U.S. federal district courts. In such instance, the combined company would expect to vigorously assert the validity and enforceability of these forum selection provisions. This may require further significant additional costs associated with resolving the dispute in other jurisdictions, and there can be no assurance that the forum selection provisions will be enforced by a court in those other jurisdictions, any of which could seriously harm the combined company’s business.

Risks Relating to Bioventus’ Business

Bioventus’ business may continue to experience adverse impacts as a result of the COVID-19 pandemic.

In 2020, the COVID-19 pandemic spread around the world and in the U.S. and, more recently, new variants of the virus have emerged, some of which have shown to be more contagious. The COVID-19 pandemic has had widespread, rapidly evolving and unpredictable impacts on global society, economies, financial markets and business practices. Federal and state governments have implemented measures in an effort to minimize the spread of the virus and ongoing effects of the pandemic, including social distancing, travel restrictions, border closures, limitations on public gatherings, mandatory closure or reduced capacity of business, work from home, supply chain logistical changes and other measures, which have caused global business disruptions and significant volatility in U.S. and international debt and equity markets. Bioventus’ business, results of operations and financial condition have been, and may continue to be, materially impacted due to the decrease in patient visits and elective procedures and any future temporary cessations of elective procedures and could be further impacted by delays in payments from customers, supply chain interruptions, extended “shelter-in-place” orders

 

55


Table of Contents

or advisories, facility closures or other reasons related to the pandemic. Furthermore, the long-term impact of COVID-19 on Bioventus’ business will depend on many factors, including, but not limited to, the duration and severity of the pandemic, new and ongoing measures taken in response to the pandemic, the availability and effectiveness of vaccines to combat COVID-19, the impact on economic activity from the pandemic and actions taken in response and the resulting impact it has on Bioventus’ partners, patients and communities in which Bioventus operates, all of which continue to be uncertain. For example, there has been a decrease in patient visits to hospitals due to risk and fear of exposure to COVID-19, as well as decreases in, or temporary moratoriums on, elective procedures, which may be re-imposed in the future. In addition to lower sales, Bioventus has experienced decreased costs as a result of the pandemic including declines in travel and lower compensation related expenses. Bioventus has also implemented other various cost reduction initiatives and measures to safeguard liquidity, refer to “Bioventus’ Management’s Discussion and Analysis” for further details on the impact of COVID-19 on Bioventus’ business.

To the extent the COVID-19 disruptions continue to adversely impact Bioventus’ business, results of operations and financial condition, it may also have the effect of heightening many of the other risks described in “Risk Factors” including risks relating to Bioventus’ ability to successfully commercialize new developed or acquired products or therapies, consolidation in the healthcare industry, disruptions in the supply or manufacturing of Bioventus’ products or their components, intensified pricing pressure as a result of changes in the purchasing behavior of hospitals and maintenance of Bioventus’ numerous contractual relationships.

Bioventus is highly dependent on a limited number of products.

Bioventus’ pain treatment and joint preservation products accounted for 53%, 54% and 49% of Bioventus’ total revenue for the years ended December 31, 2020, 2019 and 2018, respectively. Bioventus expects that sales of such products will continue to account for a substantial portion of its revenue, and therefore, its ability to execute its growth strategy and maintain profitability will depend upon the continued demand for these products. In addition, Bioventus’ supply and distribution agreements for Durolane, GELSYN-3 and SUPARTZ FX are subject to renewal and their terms end in December 2115, February 2026 and December 2028, respectively. If the supply and distribution agreements for any of Bioventus’ HA viscosupplementation therapies were terminated, its revenue would be impaired. If Bioventus’ pain treatment and joint preservation products fail to maintain their market acceptance for any reason, its business, results of operations and financial condition may be adversely affected.

Bioventus’ long-term growth depends on its ability to develop, acquire and commercialize new products, line extensions or expanded indications.

Bioventus’ industry is highly competitive and subject to rapid change and technological advancements. Therefore, it is important to Bioventus’ business that it continues to introduce new products and/or enhance its existing product offerings through line extensions or expanded indications. Developing, acquiring and commercializing products is expensive, time-consuming and could divert management’s attention away from Bioventus’ existing business. Even if Bioventus is successful in developing additional products, the success of any new product offering or enhancements to existing products will depend on several factors, including its ability to:

 

   

properly identify and anticipate the needs of healthcare professionals and patients;

 

   

develop and introduce new products, line extensions and expanded indications in a timely manner;

 

   

distinguish Bioventus’ products from those of its competitors;

 

   

avoid infringing upon the intellectual property rights of third-parties and maintain necessary intellectual property licenses from third-parties;

 

   

demonstrate, if required, the safety and efficacy of new products with data from preclinical studies and clinical trials;

 

56


Table of Contents
   

obtain clearance or approval, if required, from the FDA and other regulatory agencies, for such new products, line extensions and expanded indications, and maintain full compliance with FDA and other regulatory requirements applicable to new devices or products or modifications of existing devices or products;

 

   

provide adequate training to potential users of Bioventus’ products;

 

   

receive adequate coverage and reimbursement for Bioventus’ products; and

 

   

maintain an effective and dedicated sales and marketing team.

If Bioventus is unsuccessful in developing, acquiring and commercializing new products or enhancing its existing product offerings through line extensions and expanded indications, Bioventus’ ability to increase its net sales may be impaired.

Additionally, Bioventus’ research and development efforts may require a substantial investment of time and resources before Bioventus is adequately able to determine the commercial viability of a new product, technology, material or other innovation. Such efforts may not result in the development of a viable product. In addition, even if Bioventus is able to successfully develop new active healing products, line extensions and expanded indications, these products may not produce sales in excess of the costs of development and they may be rendered obsolete by changing customer preferences or the introduction by Bioventus’ competitors of products embodying new technologies or features.

Bioventus may be unable to successfully commercialize newly developed or acquired products or therapies in the United States.

The commercial success of newly acquired or developed products, such as MOTYS, in the United States will depend upon the awareness and acceptance of such products among the medical community, including physicians and patients. Market acceptance will depend on a number of factors, including, among others:

 

   

the perceived advantages and disadvantages of such products over existing therapies and other competitive treatments;

 

   

availability of alternative treatments;

 

   

inability to secure and maintain adequate coverage, including obtaining a unique reimbursement code;

 

   

the extent to which physicians prescribe the Company’s products;

 

   

the willingness of the target patient population to try new therapies;

 

   

the strength of marketing and distribution support of the Company’s new products and competitive products;

 

   

publicity concerning the Company’s new products, Bioventus’ existing products or competing products and treatments;

 

   

pricing and cost effectiveness of such new therapies;

 

   

the effectiveness of Bioventus’ sales and marketing strategies; and

 

   

the willingness of patients to pay out-of-pocket in the absence of third-party reimbursement.

Bioventus’ efforts to educate the medical community about the benefits of newly acquired or developed products may require significant resources and Bioventus may never be successful. If such newly acquired or developed products do not achieve an adequate level of acceptance by patients and physicians in the United States, its business, results of operations and financial condition may be adversely affected.

 

57


Table of Contents

Demand for Bioventus’ existing portfolio of products and any new products, line extensions or expanded indications depends on the continued and future acceptance of its products by physicians, patients, third-party payers and others in the medical community.

Bioventus cannot be certain that its existing portfolio of products and any new products, line extensions or expanded indications that it develops will achieve or maintain market acceptance. With respect to Bioventus’ pain treatment and joint preservation products, third-party payers may be reluctant to continue to cover Bioventus’ HA viscosupplementation therapies at their current prices. Further, new injectable therapies or oral medications may become available that help manage pain in a more convenient and/or cost effective manner than Bioventus’ HA viscosupplementation therapies. With respect to Bioventus’ BGS products, new allograft, DBMs, synthetics, growth factors, or other enhancements to Bioventus’ existing implants may never achieve broad market acceptance, which can be affected by a lack of clinical acceptance of BGSs and technologies, introduction of competitive treatment options which render BGSs and technologies too expensive or obsolete and difficulty training surgeons in the use of BGSs and technologies. Media reports or other negative publicity concerning both methods of tissue recovery from donors and actual or potential disease transmission from donated tissue may limit widespread acceptance by the medical community of Bioventus’ allografts, growth factor and DBMs, whether directed at these products generally or Bioventus’ products specifically. Unfavorable reports of improper or illegal tissue recovery practices by any participant in the industry, both in the United States and internationally, as well as incidents of improperly processed tissue leading to transmission of disease, may broadly affect the rate of future tissue donation and market acceptance of allograft based technologies by the medical community.

In addition, Bioventus believes that even if the medical community generally accepts its existing portfolio of products and any new products, line extensions or expanded indications, acceptance and recommendations by influential members of the medical community will be important to their broad commercial success. If the medical community does not broadly accept its products, Bioventus may not remain competitive in the market, which could adversely affect its business, results of operations and financial condition.

Bioventus’ commercial success depends on its ability to differentiate the HA viscosupplementation therapies that it owns or distributes from alternative therapies for the treatment of OA.

Bioventus’ ability to achieve commercial success will, at least in part, depend on its ability to differentiate the HA viscosupplementation therapies that Bioventus owns or distributes in such a way that physicians and patients will select them. The HA viscosupplementation therapies that Bioventus owns or distributes could face competition from steroid injections, other HA viscosupplementation therapies, combination HA viscosupplementation/steroid therapies and alternate therapies for the treatment of OA, including those currently in development.

Bioventus expects that the HA viscosupplementation therapies that it owns or distributes will continue to be used primarily after oral analgesics and steroid injections no longer provide adequate pain relief. In addition, the five and three injection HA viscosupplementation therapies that Bioventus distributes face competition from single injection therapies. Bioventus expects the three injection market to decline by a projected 3.1% CAGR and the five injection market to decline by a projected 13.6% CAGR from 2019 to 2024. Due to the convenience associated with the single injection treatments, it is expected that these products will continue to capture increasing market share of the HA viscosupplementation therapies market, which may adversely affect its business, results of operations and financial condition to the extent physicians and patients do not select Durolane, its single injection HA viscosupplementation therapy. There are also a number of combination HA viscosupplementation/steroid therapies currently in development. The American Association of Orthopedic Surgeons (AAOS), since the release of their May 2013 clinical practice guidelines, does not recommend the use of HA for patients with symptomatic knee OA. The evidence for the AAOS recommendation is based on two or more high quality studies with consistent findings for recommending for or against the intervention. The AAOS recommendation states that practitioners should follow a strong recommendation, such as this one, unless a clear

 

58


Table of Contents

and compelling rationale for an alternative approach is present. In May 2018, the Journal of the AAOS ranked the nonsteroidal anti-inflammatory drug naproxen the most effective in individual knee OA treatment for improving both pain and function. To the extent that any additional therapies receive approval or alternative therapies receive positive support from the AAOS or other physician associations, they could reduce the market share represented by HA viscosupplementation therapies for OA treatment and adversely affect Bioventus’ commercial success.

If Bioventus is unable to differentiate the HA viscosupplementation therapies it owns or distributes from other therapies, physicians and patients may not be willing to use them or be willing to switch from existing therapies with which they are familiar. Once physicians incorporate a particular treatment into their practice, they may not alter their practice absent compelling clinical evidence of safety and/or effectiveness and/or significant pricing reimbursement advantages.

The proposed down-classification of non-invasive bone growth stimulators, including Bioventus’ Exogen system, by the FDA could increase future competition for bone growth stimulators and otherwise adversely affect the Company’s sales of Exogen.

On August 17, 2020, FDA published a Federal Register notice announcing its proposal to reclassify non-invasive bone growth stimulators, such as Exogen, from Class III medical devices to Class II with special controls. Class III devices are subject to the most stringent regulatory pathway for approval for medical devices requiring, among other things, rigorous clinical studies and pre-approval manufacturing review. Class II devices may be cleared for marketing by the FDA under the 510(k) pathway if they are determined to be substantially equivalent to a legally marketed predicate device. The 510(k) clearance process does not always require clinical testing, and is generally less onerous than the premarket approval process applicable to Class III devices. On September 8-9, 2020, the Orthopaedic and Rehabilitation Devices Panel of the FDA Medical Devices Advisory Committee met and discussed FDA’s proposal. The Panel, whose authority is non-binding but nonetheless considered by FDA, ultimately voted in favor of FDA’s proposal to down-classify non-invasive bone growth stimulators.

The FDA has proposed that any final order would become effective 30 days after publication. While FDA has not yet finalized its proposal to down-classify non-invasive bone growth stimulators, should such down-classification occur now or in the future, Bioventus may face additional competition from new market entrants who would be able to pursue marketing authorization through the 510(k) clearance pathway instead of the more onerous and burdensome PMA approval process. Class II devices that qualify as durable medical equipment under the Medicare program may also be eligible for inclusion in Medicare’s competitive bidding program for durable medical equipment, prosthetics, orthotics and supplies. As a result of down-classification, Exogen could face additional competition or Bioventus could receive lower reimbursement amounts for Exogen, all of which could adversely affect its business, results of operations and financial condition.

If Bioventus is unable to achieve and maintain adequate levels of coverage and/or reimbursement for its products, the procedures using its products, or any future products it may seek to commercialize, the commercial success of these products may be severely hindered.

Bioventus’ products are purchased by healthcare providers and customers who typically bill third-party payers, such as government programs, including Medicare and Medicaid, or private insurance plans and healthcare networks, to cover all or a portion of the costs and fees associated with its products. Patients may also be billed for deductibles or co-payments in accordance with third-party payer policies. These third-party payers and insurers may deny reimbursement if they determine that a device or product provided to a patient or used in a procedure does not meet applicable payment criteria or if the policyholder’s healthcare insurance benefits are limited.

As required by law, the CMS, which administers the Medicare program, has continued efforts to implement a competitive bidding program for selected durable medical equipment, prosthetic and orthotic supplies items paid

 

59


Table of Contents

for by the Medicare program. In this program, Medicare rates are based on bid amounts for certain products in designated geographic areas, rather than the Medicare fee schedule amount. Bone growth stimulation products like Bioventus’ Exogen system are currently exempt from this competitive bidding process, but may be eligible for inclusion if the FDA’s proposed down-classification order becomes effective. Bioventus cannot predict which products from any of its businesses may ultimately be affected or whether or when the competitive bidding process may be extended to its businesses.

Limits put on reimbursement by third-party payers, whether foreign or domestic, governmental or commercial, could make it more difficult to buy Bioventus’ products and substantially reduce, or possibly eliminate, patient access to its products. The healthcare industry in the United States has experienced a trend toward cost containment as government and private insurers seek to control rising healthcare costs by imposing lower payment rates and negotiating reduced contract rates with providers and suppliers.

There is no uniform policy of coverage and reimbursement for Bioventus’ products or procedures using Bioventus’ products among third-party payers in the United States, and coverage and reimbursement for Bioventus’ products and procedures using Bioventus’ products can differ significantly from payer to payer. Further, these payers regularly review new and existing technologies for possible coverage and can, without notice, deny or reverse coverage for new or existing products and treatments. Third-party payers may not consider Bioventus’ products to be medically necessary or cost-effective for certain indications or off-label uses or for all uses, and as a result, may not provide coverage for the products. For example, Blue Cross Blue Shield Association’s Evidence Street platform issued a report in April 2018 questioning the efficacy of Bioventus’ Exogen system, which resulted in several non-coverage policies being issued by member organizations. Additionally, to the extent that third party payers decide that they are no longer willing to provide reimbursement for physician prescribed off-label uses of Exogen, sales may be negatively impacted. See “Risk Factors—Risks Relating to Government Regulation.” Bioventus may be subject to enforcement action if it engages in improper marketing or promotion of Bioventus’ products, and the misuse or off-label use of Bioventus’ products may harm its image in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies if Bioventus is deemed to have engaged in the promotion of these uses, any of which could be costly to Bioventus’ business.

Bioventus may also be required to conduct expensive clinical studies to justify coverage and reimbursement and/or the level of reimbursement relative to other therapies. In addition, should governmental authorities continue to enact legislation or adopt regulations that affect third-party coverage and reimbursement, access to Bioventus’ products and coverage by private or public insurers may be reduced. If third-party payers or insurers that currently cover or reimburse Bioventus’ products or the procedures in which they are used limit their coverage or reimbursement in the future, or if other third-party payers or insurers issue similar policies, this could impact Bioventus’ ability to sell its products, force Bioventus to lower the price it charges for Bioventus’ products, and adversely affect its business, results of operations and financial condition.

Bioventus’ ability to market and sell its products could be harmed by future actions by CMS, other government agencies or private payers to diminish payments to healthcare providers and suppliers. For example, the CMS, in its ongoing implementation of the Medicare program, periodically reviews medical study literature to determine how the literature addresses certain procedures and therapies in the Medicare population. The impact that these assessments could have on Medicare or third-party payer coverage determinations for Bioventus’ products is currently unknown, but Bioventus cannot provide assurances that the resulting actions will not restrict Medicare or other insurance coverage for its products. In addition, there can be no assurance that Bioventus or Bioventus’ distributors will not experience significant coverage or reimbursement impediments in the future related to these or other programs and policies of CMS. Specifically, drug pricing reform legislation and executive orders, which could negatively affect the reimbursement rates paid for HA viscosupplements, have been issued by the White House and proposed and enacted by Congress. For example, the Consolidated Appropriations Act, 2021(CAA), was signed into law on December 27, 2020, and will expand price reporting obligations for manufacturers of certain products reimbursed under Medicare Part B beginning, January 1, 2022. CMS could utilize the new

 

60


Table of Contents

pricing information to adjust Medicare payment for these products, which may include HA viscosupplements. Bioventus cannot predict how this law will be implemented by CMS, or the extent to which this law, or other proposals that may be enacted in the future, may impact the Medicare payment available for its HA viscosupplements.

Private payers may adopt coverage decisions and payment amounts determined by CMS as guidelines in setting their coverage and reimbursement policies. In addition, for some governmental programs, such as Medicaid, coverage and reimbursement differs from state to state. Medicaid payments to physicians, facilities and other providers are often lower than payments by other third-party payers and some state Medicaid programs may not pay an adequate amount for the procedures performed with Bioventus’ products, if any payment is made at all. If CMS, other government agencies or private payers lower their reimbursement rates, or if any of the proposed drug pricing executive orders or legislative reforms are enacted, the commercial success of Bioventus’ products may be adversely affected.

Bioventus’ business may be adversely affected if consolidation in the healthcare industry leads to demand for price concessions or if a GPO, third-party payers or other similar entities exclude Bioventus from being a supplier.

Healthcare costs have risen significantly over the past decade, which has resulted in or led to numerous cost reform initiatives by legislators, regulators and third-party payers. Cost reform has triggered a consolidation trend in the healthcare industry to aggregate purchasing power, which may increase requests for pricing concessions or risk vendor exclusion. For example, non-clinical staff at hospitals are increasingly involved in the evaluation of products and product purchasing decisions. In order for Bioventus to sell its products, Bioventus must convince such staff as well as physicians and hospitals that its products are attractive alternatives to competing products for use in surgical procedures. Additionally, GPOs, independent delivery networks and large single accounts may continue to use their market power to consolidate purchasing decisions for physicians. Third-party payers may also continue to use their market power to reduce the reimbursement for Bioventus’ products by increasing the rebates Bioventus is required to pay them when its products are covered, which may negatively impact its results. Bioventus expects that market demand, government regulation, third-party coverage and reimbursement policies and societal pressures will continue to change the healthcare industry worldwide, resulting in further business consolidations and alliances among Bioventus’ customers, which may exert further downward pressure on the prices of its products.

If Bioventus chooses to acquire or invest in new businesses, products or technologies, it may be unable to complete these acquisitions or to successfully integrate them in a cost-effective and non-disruptive manner.

Bioventus’ success depends on its ability to enhance and broaden its product offerings in response to changing customer demands, competitive pressures and advances in technologies. Bioventus continues to search for viable acquisition candidates or strategic alliances that would expand its market sector and/or global presence, as well as additional products appropriate for current distribution channels. Accordingly, Bioventus may in the future pursue the acquisition of, or joint ventures relating to, new businesses, products or technologies instead of developing them internally. For example, BV LLC entered into an Option and Equity Purchase Agreement with CartiHeal providing, among other things, (i) BV LLC with an exclusive option to acquire 100% of CartiHeal’s shares, or the Call Option, and (ii) CartiHeal with a put option that would require BV LLC to purchase 100% of CartiHeal’s shares, or the Put Option, in each case pursuant to the terms and subject to the conditions set forth in the Option and Equity Purchase Agreement and as described above. See “Description of Bioventus’ Business—Development and Clinical Pipeline—Treatment of Cartilage for Osteochondral defects—CartiHeal (developer of Agili-C) investment and option and equity purchase agreement.” Other risks involving potential future and completed acquisitions and strategic investments include:

 

   

risks associated with conducting due diligence;

 

   

problems integrating the purchased technologies, products or business operations;

 

61


Table of Contents
   

inability to achieve the anticipated synergies and overpaying for acquisitions or unanticipated costs associated with acquisitions;

 

   

invalid net sales assumptions for potential acquisitions;

 

   

issues maintaining uniform standards, procedures, controls and policies;

 

   

diversion of management’s attention from Bioventus’ core business;

 

   

adverse effects on existing business relationships with suppliers, distributors and customers;

 

   

risks associated with entering new markets in which Bioventus has limited or no experience;

 

   

potential loss of key employees of acquired businesses; and

 

   

increased legal, accounting and compliance costs.

Bioventus competes with other companies for these opportunities, and it may be unable to consummate such acquisitions or joint ventures on commercially reasonable terms, or at all. In addition, acquired businesses may have ongoing or potential liabilities, legal claims (including tort and/or personal injury claims) or adverse operating issues that Bioventus fails to discover through due diligence prior to the acquisition. Even if Bioventus is aware of such liabilities, claims or issues, it may not be able to accurately estimate the magnitude of the related liabilities and damages. In particular, to the extent that prior owners of any acquired businesses or properties failed to comply with or otherwise violated applicable laws or regulations, failed to fulfill their contractual obligations to their customers, or failed to satisfy legal obligations to employees or third parties, we, as the successor, may be financially responsible for these violations and failures and may suffer reputational harm or otherwise be adversely affected. Acquisitions also frequently result in the recording of goodwill and other intangible assets which are subject to potential impairment in the future that could harm Bioventus’ financial results. If Bioventus were to issue additional equity in connection with such acquisitions, this may dilute its stockholders.

Pricing pressure from Bioventus’ competitors or hospitals may affect its ability to sell its products at prices necessary to support its current business strategies.

Medical device companies, healthcare systems and GPOs have intensified competitive pricing pressure as a result of industry trends and new technologies. Purchasing decisions are gradually shifting to hospitals, IDNs and other hospital groups, with surgeons and other physicians increasingly acting only as “employees.” Changes in the purchasing behavior of hospitals or the amount third-party payers are willing to reimburse Bioventus’ customers for procedures using its products, including those as a result of healthcare reform initiatives, could create additional pricing pressure on Bioventus. In addition to these competitive forces, Bioventus continues to see pricing pressure as hospitals introduce new pricing structures into their contracts and agreements, including fixed price formulas, capitated pricing and episodic or bundled payments intended to contain healthcare costs. If such trends continue to drive down the prices Bioventus is able to charge for its products, its profit margins will shrink, adversely affecting its business, results of operations and financial condition.

If Bioventus fails to successfully enter into purchasing contracts for its BGS products or engage in contract bidding processes internationally, Bioventus may not be able to receive access to certain hospital facilities and its sales may decrease.

In the United States, the hospital facilities where physicians treat patients with Bioventus’ BGS products typically require Bioventus to enter into purchasing contracts. The process of securing a satisfactory contract can be lengthy and time-consuming and require extensive negotiations and management time. In certain international jurisdictions, from time to time, certain institutions require Bioventus to engage in a contract bidding process in the event that such institutions are considering making purchase commitments that exceed specified cost thresholds, which vary by jurisdiction. These processes are only open at certain periods of time, and Bioventus

 

62


Table of Contents

may not be successful in the bidding process. If Bioventus does not receive access to hospital facilities through these contracting processes or otherwise, or if Bioventus is unable to secure contracts or tender successful bids, its sales may stagnate or decrease and its operating results may be harmed. Furthermore, Bioventus may expend significant effort in these time-consuming processes and still may not obtain a purchase contract from such hospitals.

Governments outside the United States may not provide coverage or reimbursement of Bioventus’ products, which may adversely affect its business, results of operations and financial condition.

Acceptance of Bioventus’ products in international markets may depend, in part, upon the availability of coverage and reimbursement within prevailing healthcare payment systems. Reimbursement and healthcare payment systems in international markets vary significantly by country, and include both government-sponsored healthcare and private insurance. Bioventus’ products may not obtain international coverage and reimbursement approvals in a timely manner, if at all, which may require consumers desiring Bioventus’ products to purchase them directly. Third-party coverage and reimbursement for Bioventus’ products or any of its products in development for which it may receive regulatory approval may not be available or adequate in international markets, which could adversely affect its business, results of operations and financial condition.

Bioventus’ future growth depends on physician awareness of the distinctive characteristics, benefits, safety, clinical efficacy and cost-effectiveness of its products.

Bioventus focuses its sales, marketing and training efforts on physicians, surgeons and other health care professionals. The acceptance of Bioventus’ products depends in part on its ability to educate physicians as to the distinctive characteristics, benefits, safety, clinical efficacy and cost-effectiveness of Bioventus’ products compared to alternative products, procedures and therapies. If physicians, surgeons or other healthcare professionals are not properly trained, they may misuse or ineffectively use Bioventus’ products, which may result in unsatisfactory patient outcomes, patient injury, negative publicity or lawsuits against Bioventus. In addition, a failure to educate physicians, surgeons or other healthcare professionals regarding Bioventus’ products may impair its ability to achieve market acceptance of its products.

Bioventus competes and may compete in the future against other companies, some of which have longer operating histories, more established products or greater resources than Bioventus does, which may prevent Bioventus from achieving increased market penetration or improved operating results.

The medical device industry is characterized by intense competition, subject to rapid change and significantly affected by market activities of industry participants, new product introductions and other technological advancements. Bioventus believes that its competitors have historically dedicated and will continue to dedicate significant resources to promote their products or to develop new products. Bioventus has competitors in the United States and internationally, including major medical device and pharmaceutical companies, biotechnology companies and universities and other research institutions.

These companies and other industry participants may develop alternative treatments, products or procedures that compete directly or indirectly with Bioventus’ products. If alternative treatments are, or are perceived to be, superior to Bioventus’ products, sales of Bioventus’ products could be adversely affected and its results of operations could suffer. Bioventus’ competitors may also develop and patent processes or products earlier than Bioventus can or obtain regulatory clearance or approvals for competing products more rapidly than it can, which could impair Bioventus’ ability to develop and commercialize similar processes or products.

Many of Bioventus’ current and potential competitors are major medical device and pharmaceutical companies that have substantially greater financial, technical and marketing resources than Bioventus does, and they may succeed in developing products that would render Bioventus’ products obsolete or noncompetitive. It is also possible that Bioventus’ competition will be able to leverage their large market share to set prices at a level below that which is profitable for Bioventus.

 

63


Table of Contents

Some of Bioventus’ competitors enjoy several competitive advantages over Bioventus, including:

 

   

greater financial, human and other resources for product research and development, sales and marketing and litigation;

 

   

significantly greater name recognition;

 

   

control of intellectual property and more expansive portfolios of intellectual property rights, which could impact future products under development;

 

   

greater experience in obtaining and maintaining regulatory clearances or approvals for products and product enhancements;

 

   

established relationships with hospitals and other healthcare providers, physicians, suppliers, customers and third-party payers;

 

   

additional lines of products, and the ability to bundle products to offer greater incentives to gain a competitive advantage; and

 

   

more established sales, marketing and worldwide distribution networks.

The potential introduction by competitors of products that compete with Bioventus’ existing or planned products may also make it difficult to market or sell its products. In addition, the entry of multiple new products and competitors may lead some of Bioventus’ competitors to employ pricing strategies that could adversely affect the pricing of its products and pricing in the market generally.

As a result, Bioventus’ ability to compete successfully will depend on its ability to develop proprietary products that reach the market in a timely manner, receive adequate coverage and reimbursement from third-party payers, and are safer, less invasive and more effective than alternatives available for similar purposes. If Bioventus is unable to do so, its sales or margins could decrease, which would adversely affect its business, results of operations and financial condition.

The reclassification of Bioventus’ HA products from medical devices to drugs in the United States by the FDA could negatively impact its ability to market these products and may require that Bioventus conduct costly additional clinical studies to support current or future indications for use of those products.

On December 18, 2018, the FDA published notice in the Federal Register announcing its intention to reconsider the appropriate classification of HA intra-articular products intended for the treatment of pain in OA of the knee. Although HA products intended for this use have previously been regulated as medical devices, in its notice the FDA stated that current published scientific literature supports that HA products achieve their primary intended purpose of treatment of pain in OA of the knee through biological action in the body which would require such products being classified as drugs. The FDA has encouraged organizations intending to submit applications for changes in indications for use, formulation, or route of administration of their HA products to obtain from the FDA an informal or formal classification and jurisdiction determination as a drug or device through a pre-request for designation or request for designation, respectively, prior to submission of such application. However, the FDA to date has taken no action to reclassify HA products from medical devices to drugs, or indicated what the potential ramifications would be for currently marketed HA products if a reclassification were to occur.

Bioventus currently markets three HA products: Durolane, GELSYN-3 and SUPARTZ FX. If the reclassification of HA products were to occur, the FDA may not allow Bioventus to continue to market these products without submitting additional clinical trial data, obtaining approval of a NDA for these products, or without otherwise complying with new conditions or limitations on how those products are marketed. Clinical testing can take years to complete, can be expensive and carries uncertain outcomes, and there is no guarantee that would be able to successfully obtain and maintain any required regulatory approvals. These new regulatory obligations could

 

64


Table of Contents

result in increased regulation of Durolane, GELSYN-3 and SUPARTZ FX and would subject these products to a new set of regulatory requirements to which they have not been previously subject. These changes could ultimately increase Bioventus’ costs and adversely impact its business, results of operations and financial condition if they were to be implemented. See “Risk Factors—Risks Relating to Bioventus’ Business.” If Bioventus is unable to achieve and maintain adequate levels of coverage and/or reimbursement for Bioventus’ products, the procedures using Bioventus’ products, or any future products Bioventus may seek to commercialize, the commercial success of these products may be severely hindered.

Bioventus’ ability to maintain its competitive position depends on its ability to attract, retain and motivate its senior management team and highly qualified personnel, and Bioventus’ failure to do so could adversely affect its business, results of operations and financial condition.

Bioventus believes that its continued success depends to a significant extent upon the skill, experience and performance of members of its senior management team, who have been critical to the management of Bioventus’ operations and implementation of its strategy, as well as Bioventus’ ability to continue to attract, retain and motivate additional executive officers, and other key employees and consultants, such as those individuals who are engaged in Bioventus’ research and development efforts. The replacement of any of Bioventus’ key personnel likely would involve significant time and costs and may significantly delay or prevent the achievement of Bioventus’ business objectives and could therefore adversely affect its business, results of operations and financial condition. In addition, Bioventus does not carry any “key person” insurance policies that could offset potential loss of service under applicable circumstances.

Competition for experienced employees in the medical device industry can be intense. To attract, retain and motivate qualified employees, Bioventus may utilize equity-based incentive awards such as employee stock options. If the value of such equity incentive awards does not appreciate as measured by the performance of the price of Bioventus class A common stock and ceases to be viewed as a valuable benefit, Bioventus’ ability to attract, retain and motivate its employees could be adversely impacted, which could adversely affect its business, results of operations and financial condition and/or require Bioventus to increase the amount Bioventus expends on cash and other forms of compensation.

Since inception, Bioventus’ history of operations has included periods of net losses, and Bioventus may not be able to sustain profitability.

For the years ended December 31, 2020, 2019 and 2018, Bioventus had net income from continuing operations of $14.7 million, $8.1 million and $4.4 million, respectively. Bioventus had an accumulated deficit of $144.5 million and $141.7 million as of December 31, 2020 and 2019, respectively. Bioventus’ ability to generate sufficient net sales from its existing products or from any of its products in development or products that Bioventus acquires, in order to sustain profitability, is uncertain, and, since inception, Bioventus’ history of operations has previously included periods of net loss. Bioventus expects that its operating expenses will continue to increase as Bioventus continues to develop, enhance and commercialize new products and incur additional operational costs associated with being a public company. Furthermore, Bioventus may not be able to sustain or increase profitability on an ongoing basis. If Bioventus does not achieve sustained profitability, it will be more difficult for Bioventus to finance its business and accomplish its strategic objectives.

If Bioventus fails to properly manage its anticipated growth, its business could suffer.

Bioventus has been growing steadily in recent periods, prior to the impact of COVID-19. Bioventus intends to continue to grow and may experience periods of rapid growth and expansion, which could place a significant additional strain on Bioventus’ limited personnel, information technology systems and other resources. In particular, Bioventus’ sales force and distributor network requires significant management, training, financial and other supporting resources. Any failure by Bioventus to manage its growth effectively could have an adverse effect on Bioventus’ ability to achieve its development and commercialization goals.

 

65


Table of Contents

To achieve its revenue goals, Bioventus must also successfully increase supply of its products to meet expected customer demand. In the future, Bioventus may experience difficulties with yields, quality control, component supply and shortages of qualified personnel, among other problems. These problems could result in delays in product availability and increases in expenses. Any such delay or increased expense could adversely affect Bioventus’ ability to generate revenue.

Future growth will also impose significant added responsibilities on management, including the need to identify, recruit, train and integrate additional employees. In addition, rapid and significant growth will place a strain on Bioventus’ administrative and operational infrastructure.

In order to manage its operations and growth Bioventus will need to continue to improve its operational and management controls, reporting and information technology systems and financial internal control procedures. If Bioventus is unable to manage its growth effectively, it may be difficult for Bioventus to execute its business strategy and its operating results and business could suffer.

Bioventus may not be able to strengthen Bioventus’ brand and the brands associated with Bioventus’ products.

Bioventus believes that strengthening the Bioventus brand and the brands associated with Bioventus’ products is critical to achieving widespread acceptance of its products, particularly because of the rapidly developing nature of the market for active healing products. Promoting and positioning Bioventus’ brand will depend largely on the success of its marketing efforts and the reliability of its products. Historically, Bioventus’ efforts to build its brand have involved marketing expenses, and it is likely that Bioventus’ future marketing efforts will require it to incur additional expenses. These brand promotion activities may not yield increased sales and, even if they do, any sales increases may not offset the expenses Bioventus incurs to promote its brand and its products. If Bioventus fails to successfully promote and maintain its brand, or if Bioventus incurs substantial expenses in an unsuccessful attempt to promote and maintain its brand and the brands of its products, Bioventus’ products may not be accepted by healthcare providers, which would cause Bioventus’ sales to decrease and would adversely affect its business, results of operations and financial condition.

Bioventus faces the risk of product liability claims that could be expensive, divert management’s attention and harm its reputation and business. Bioventus may not be able to maintain adequate product liability insurance.

Bioventus’ business exposes Bioventus to the risk of product liability claims that are inherent in the testing, manufacturing and marketing of its products. This risk exists even if a product is cleared or approved for commercial sale by the FDA and manufactured in facilities regulated by the FDA or an applicable foreign regulatory authority. Bioventus’ products are designed to affect, and any future products will be designed to affect, important bodily functions and processes. Any side effects, manufacturing defects, misuse or abuse associated with Bioventus’ products or Bioventus’ products in development could result in patient injury or death. The medical device industry has historically been subject to extensive litigation over product liability claims, and Bioventus cannot assure you that it will not face product liability claims. Bioventus may be subject to product liability claims if its products or products in development cause, or merely appear to have caused, patient injury or death, even if such injury or death was as a result of supplies or components that are produced by third-party suppliers. Product liability claims may be brought against Bioventus by consumers, healthcare providers or others selling or otherwise coming into contact with Bioventus’ products, among others. If Bioventus cannot successfully defend Bioventus against product liability claims, Bioventus will incur substantial liabilities and reputational harm. In addition, regardless of merit or eventual outcome, product liability claims may result in:

 

   

costs of litigation;

 

   

distraction of management’s attention from Bioventus’ primary business;

 

   

the inability to commercialize existing or new products;

 

66


Table of Contents
   

decreased demand for Bioventus’ products or, if cleared or approved, products in development;

 

   

damage to Bioventus’ business reputation;

 

   

product recalls or withdrawals from the market;

 

   

withdrawal of clinical trial participants;

 

   

substantial monetary awards to patients or other claimants; and

 

   

loss of net sales.

While Bioventus has attempted and may continue to attempt to manage Bioventus’ product liability exposure by proactively recalling or withdrawing from the market any defective products, any recall or market withdrawal of Bioventus’ products may delay the supply of those products to its customers and may impact its reputation. For example, Bioventus has in the past instituted a voluntary recall for certain of its products. Bioventus cannot assure you that it will be successful in initiating appropriate market recall or market withdrawal efforts that may be required in the future or that these efforts will have the intended effect of preventing product malfunctions and the accompanying product liability that may result. Such recalls and withdrawals may also be used by Bioventus’ competitors to harm its reputation for product safety or be perceived by patients as a safety risk when considering the use of Bioventus’ products, either of which could adversely affect its business, results of operations and financial condition.

In addition, although Bioventus has product liability and clinical study liability insurance that Bioventus believes is appropriate, this insurance is subject to deductibles and coverage limitations. Bioventus’ current product liability insurance may not continue to be available to it on acceptable terms, if at all, and, if available, coverage may not be adequate to protect Bioventus against any future product liability claims. If Bioventus is unable to obtain insurance at an acceptable cost or on acceptable terms or otherwise protect against potential product liability claims, Bioventus could be exposed to significant liabilities. A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could adversely affect its business, results of operations and financial condition.

Fluctuations in the demand for Bioventus’ products or its inability to forecast demand accurately may influence the ability of Bioventus’ suppliers to meet its delivery needs or result in excess product inventory.

Bioventus is required by some of its contracts with suppliers of its products to forecast future product demand or meet minimum purchase requirements. Bioventus’ supply agreement for Durolane is subject to a minimum order volume for each order and purchase amounts are based in part on forecasts. Bioventus is also subject to certain annual minimum purchase requirements for GELSYN-3 and SUPARTZ FX and purchase amounts are based on rolling annual forecasts. Bioventus’ forecasts are based on multiple assumptions of product and market demand, which may cause Bioventus’ estimates to be inaccurate. If Bioventus underestimates demand, it may not have adequate supplies and could have reduced control over pricing, availability and delivery schedules with Bioventus’ suppliers, which could prevent Bioventus from meeting increased customer or consumer demand and harm Bioventus’ business. However, if Bioventus overestimates its demand, it may have underutilized assets and may experience reduced margins. If Bioventus does not accurately align its supplies with demand and/or fail to meet contractual minimum purchase requirements, its business, results of operations and financial condition may be adversely affected. For example, if Bioventus fails to order the minimum order quantity of SUPARTZ FX from SKK Bioventus is obligated to pay SKK a specified fee equal to the number of units needed to meet the minimum order quantity multiplied by a specified percentage of the purchase price.

Bioventus may face issues with respect to the supply of Bioventus’ products or their components, including increased costs, disruptions of supply, shortages, contamination or mislabeling.

Bioventus is dependent on a limited number of suppliers for Bioventus’ products and components used in the manufacturing process of its products. Bioventus’ top three suppliers provide Bioventus with products and

 

67


Table of Contents

components that constituted 53%, 54% and 49% of total net sales for the years ended December 31, 2020, 2019 and 2018, respectively. Durolane, GELSYN-3 and SUPARTZ FX are supplied by single-source third-party manufacturers. Bioventus’ Exogen system undergoes final assembly with components procured from various suppliers, including a transducer, which is a key component that is supplied by a single source supplier. Bioventus may not be able to renew or enter into new contracts with its existing suppliers following the expiration of such contracts on commercially reasonable terms, or at all.

In particular, the success of Bioventus’ bone graft substitutions product portfolio, depends on its suppliers continuing to have access to donated human cadaveric tissue, as well as the maintenance of high standards in their processing methodology. The supply of such donors can fluctuate over time. Bioventus cannot be certain that its current suppliers who rely on allograft bone tissue, plus any additional sources that its suppliers identify in the future, will be sufficient to meet its product needs. Bioventus’ dependence on a limited number of third-party suppliers and the challenges that they may face in obtaining adequate supplies of allograft bone tissue involve several risks, including limited control over pricing, availability, quality and delivery schedules. Bioventus may be unable to find an alternative supplier in a reasonable time period or on commercially reasonable terms, if at all, which would adversely affect its business, results of operations and financial condition.

If any of Bioventus’ products or the components used in its products are alleged or proven to include quality or product defects, including as a result of improper methods of tissue recovery from donors and disease transmission from donated tissue or illegal harvesting, Bioventus may need to find alternate supplies, delay production of its products, discard or otherwise dispose of its products, or engage in a product recall, all of which may adversely affect its business, results of operations and financial condition. If Bioventus’ products or the components in its products are affected by adverse prices or quality or other concerns, Bioventus may not be able to identify alternate sources of components or other supplies that meet its quality controls and standards to sustain its sales volumes or on commercially reasonable terms, or at all.

Bioventus relies on a limited number of third-party manufacturers to manufacture certain of Bioventus’ products.

Third-party manufacturers generally manufacture Durolane, GELSYN-3, SUPARTZ FX, Exogen components and Bioventus’ bone graft substitutions product portfolio. Bioventus has developed in-house assembly capabilities for its Exogen system. Bioventus and its third-party manufacturers are required to comply with the QSR which is a set of FDA regulations that establishes cGMP requirements for medical devices and covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of such devices. Moreover, certain of Bioventus’ products may be re-classified as drugs, and Bioventus is planning to seek approval of a product pursuant to the BLA pathway. In each case, such products would be required to comply with the cGMP requirements that apply to drugs and biologics, respectively.

There are a limited number of suppliers and third-party manufacturers that operate under FDA’s QSR requirements and that have the necessary expertise and capacity to manufacture Bioventus’ products or components for its products. As a result, it may be difficult for Bioventus to locate manufacturers for its anticipated future needs, and its anticipated growth could strain the ability of its current suppliers and third-party manufacturers to deliver products, materials and components to Bioventus. Upon expiration of Bioventus’ existing agreements with these third-party manufacturers, Bioventus may not be able to renegotiate the terms of its agreements with these third-party manufacturers on a commercially reasonable basis, or at all.

If Bioventus or its third-party manufacturers fail to maintain facilities in accordance with the FDA’s QSR, the noncomplying party could lose the ability to manufacture Bioventus’ products on a commercial scale. Loss of this manufacturing capability would limit Bioventus’ ability to sell its products, including Durolane, GELSYN-3, SUPARTZ FX and Bioventus’ bone graft substitutions product portfolio, which are manufactured by single-source third-party manufacturers. See “Description of Bioventus’ Business—Manufacturing and supply.”

 

68


Table of Contents

The manufacturing of Bioventus’ products may not be easily transferable to other sites in the event that any of its third-party manufacturers experience breakdown, failure or substandard performance of equipment, disruption of supply or shortages of, or quality issues with, components of Bioventus’ products and other supplies, labor problems, power outages, adverse weather conditions, natural disasters, global pandemics, such as COVID-19, or the need to comply with environmental and other directives of governmental agencies. From time to time, a third-party manufacturer may experience financial difficulties, bankruptcy or other business disruptions, which could disrupt Bioventus’ supply of finished goods or require that Bioventus incur additional expense by providing financial accommodations to the third-party manufacturer or taking other steps to seek to minimize or avoid supply disruption, such as establishing a new third-party manufacturing arrangement with another provider. The loss of any of these third-party manufacturers or the failure for any reason of any of these third-party manufacturers to fulfill their obligations under their agreements with Bioventus, including a failure to meet Bioventus’ quality controls and standards, may result in disruptions to Bioventus’ supply of finished goods. Bioventus may be unable to locate an additional or alternate third-party manufacturing arrangement that meets Bioventus’ quality controls and standards in a timely manner or on commercially reasonable terms, if at all. If this occurs, its business, results of operations and financial condition will be adversely affected.

If Bioventus’ facilities are damaged or become inoperable, Bioventus will be unable to continue to research, develop and manufacture its products and, as a result, its business, results of operations and financial condition may be adversely affected until Bioventus is able to secure a new facility.

Bioventus does not have redundant facilities for the final assembly of its Exogen system. Bioventus’ other facilities and equipment would be costly to replace and could require substantial lead-time to repair or replace. Bioventus’ facilities may be harmed or rendered inoperable by natural or man-made disasters, including, but not limited to, tornadoes, flooding, fire and power outages. Such disasters may render it difficult or impossible to manufacture and commercialize Bioventus’ products and conduct its research and development activities for new products, line extensions and expanded indications. The inability to perform those activities, combined with Bioventus’ limited inventory of supplies, components and finished product, may result in the inability to continue manufacturing or supplying Bioventus’ products during such periods and the loss of customers or harm to Bioventus’ reputation. Although Bioventus possesses insurance for damage to its facilities and the disruption of its business, this insurance may not be sufficient to cover all of Bioventus’ potential losses and this insurance may not continue to be available to Bioventus on acceptable terms, or at all.

If Bioventus fails to maintain its numerous contractual relationships, its business, results of operations and financial condition could be adversely affected.

Bioventus is party to numerous contracts in the normal course of its business, including its supply and distribution agreements for Durolane, which has a current term expiring in December 2115, GELSYN-3, which has a current term expiring in February 2026, and SUPARTZ FX, which has a current term expiring in December 2028. Bioventus has contractual relationships with suppliers, distributors and agents, as well as service providers. In the aggregate, these contractual relationships are necessary for Bioventus to operate its business. From time to time, Bioventus amends, terminates or negotiates its contracts. Bioventus may also periodically be subject to, or make claims of breach of contract, or threaten legal action relating to Bioventus’ contracts. These actions may result in litigation. At any one time, Bioventus has a number of negotiations under way for new or amended commercial agreements. Bioventus devotes substantial time, effort and expense to the administration and negotiation of contracts involved in Bioventus’ business. However, these contracts may not continue in effect past their current term or Bioventus may not be able to negotiate satisfactory contracts in the future with current or new business partners, which may adversely affect its business, results of operations and financial condition.

 

69


Table of Contents

If Bioventus is unable to manage, train, maintain and grow its direct sales team and network of independent distributors, Bioventus may not be able to generate anticipated sales or it may be subject to regulatory or enforcement action.

Bioventus’ operating results are directly dependent upon the sales and marketing efforts of not only its direct sales team, but also its independent distributors. If Bioventus’ direct sales team or independent distributors fail to adequately promote, market and sell its products, its sales could significantly decrease.

Bioventus faces significant challenges and risks in managing its geographically dispersed distribution network and retaining the individuals who make up that network. If any members of Bioventus’ direct sales team were to leave Bioventus, or if any of its independent distributors were to cease to do business with Bioventus, Bioventus’ sales could be adversely affected. In such a situation, Bioventus may need to seek alternative independent distributors or increase its reliance on its direct sales team, which may not prevent Bioventus’ sales from being adversely affected. If a member of Bioventus’ direct sales team or independent distributor were to depart and be retained by one of its competitors, Bioventus may be unable to prevent them from helping competitors solicit business from its existing customers, which could further adversely affect Bioventus’ sales. Because of the competition for their services, Bioventus may be unable to recruit or retain additional qualified independent distributors or to hire additional direct sales team members to work with Bioventus on favorable or commercially reasonable terms, if at all. Failure to hire or retain qualified members of its direct sales team or independent distributors would prevent Bioventus from maintaining or expanding its business and generating sales.

If Bioventus launches new products or increase its marketing efforts with respect to existing products, it will need to expand the reach of Bioventus’ marketing and sales networks. Bioventus’ future success will depend largely on its ability to continue to hire, train, retain and motivate skilled members of its direct sales team and independent distributors with significant technical knowledge in active healing products. New hires require training and take time to achieve full productivity. If Bioventus fails to train new hires adequately, or if Bioventus experiences high turnover in its sales force in the future, Bioventus cannot be certain that new hires will become as productive as may be necessary to maintain or increase its sales. Further, if Bioventus is unable to adequately train new hires and/or members of Bioventus’ direct sales team, if new hires and/or members of Bioventus’ direct sales team engage in practices such as the promotion of unapproved or off-label uses of its devices or if new hires and/or members of its direct sales team assist with the reimbursement process in a manner that results in false or fraudulent claims for reimbursement being submitted to government or private payers, Bioventus may be subject to investigations or regulatory or enforcement actions by governmental authorities or third party payers for reasons such as the promotion of unapproved or off-label uses of Bioventus’ devices, inappropriate actions and involvement in the reimbursement process, or inappropriate completion of reimbursement forms. See “Risk Factors—Risks Relating to Government Regulation.” Bioventus may be subject to enforcement action if it engages in improper claims submission practices and resulting audits or denials of Bioventus’ claims by government agencies could reduce Bioventus’ net sales or profits.”

If Bioventus is unable to expand its sales and marketing capabilities domestically and internationally, it may not be able to effectively commercialize Bioventus’ products, which would adversely affect its business, results of operations and financial condition.

Actual or attempted breaches of security, unauthorized disclosure of information, denial of service attacks or the perception that personal and/or other sensitive or confidential information in Bioventus’ possession or control is not secure, could result in a material loss of business, substantial legal liability or significant harm to Bioventus’ reputation.

Bioventus receives, collects, processes, use and stores a large amount of information, including personally identifiable, protected health and other sensitive and confidential information. This data is often accessed by Bioventus through transmissions over public and private networks, including the Internet. The secure transmission of such information over the Internet and other mechanisms is essential to maintain confidence in

 

70


Table of Contents

Bioventus’ Information Technology (IT) systems. Despite the privacy and security measures Bioventus has in place to ensure compliance with applicable laws, regulations and contractual requirements, Bioventus’ facilities and systems, and those of Bioventus’ third-party vendors and service providers, are vulnerable to privacy and security incidents including, but not limited to, computer hacking, breaches, acts of vandalism or theft, computer viruses and other malware, including ransomware or other forms of cyber-attack, misplaced or lost data, programming and/or human errors or other similar events. A party, whether internal or external, that is able to circumvent Bioventus’ security systems could, among other things, misappropriate or misuse sensitive or confidential information, user information or other proprietary information, or cause significant interruptions in Bioventus’ operations. Internal or external parties have and will continue to attempt to circumvent Bioventus’ security systems, and Bioventus expects that it may in the future experience external attacks on its network, such as, reconnaissance probes, denial of service attempts, malicious software attacks and phishing attacks.

Because the techniques used to circumvent security systems can be highly sophisticated and change frequently, often are not recognized until launched against a target and may originate from less regulated and remote areas around the world, Bioventus may be unable to proactively address all possible techniques or implement adequate preventive measures for all situations. Recent, well-publicized attacks on prominent companies have resulted in the theft of significant amounts of sensitive and personal information and demonstrate the sophistication of the perpetrators and magnitude of the threat posed to companies across the nation, including the health care industry.

If someone is able to circumvent or breach Bioventus’ security systems, they could steal any information located therein or cause interruptions to its operations. Security breaches or attempts thereof could also damage Bioventus’ reputation and expose Bioventus to a risk of monetary loss and/or litigation, fines and sanctions. Bioventus also faces risks associated with security breaches affecting third parties that conduct business with Bioventus or its customers and others who interact with its data. While Bioventus maintains insurance that covers certain security and privacy breaches, it may not carry appropriate insurance or maintain sufficient coverage to compensate for all potential liability. Additionally, the costs incurred to remediate any data security or privacy incident could be substantial.

Bioventus cannot assure you that its third-party service providers with access to Bioventus’ or its customers’, suppliers’, trial patients’, and employees’ personally identifiable and other sensitive or confidential information in relation to which Bioventus is responsible will not breach contractual obligations imposed by Bioventus, or that they will not experience data security breaches or attempts thereof, which could have a corresponding effect on Bioventus’ business including putting Bioventus in breach of its obligations under privacy laws and regulations and/or which could in turn adversely affect its business, results of operations and financial condition. While Bioventus attempts to address the associated risks by performing security assessments and detailed due diligence, it cannot assure you that these contractual measures and Bioventus’ own privacy and security-related safeguards will protect it from the risks associated with the third-party processing, storage and transmission of such information.

Failure of a key information technology and communication system, process or site could adversely affect its business, results of operations and financial condition.

Bioventus relies extensively on information technology and communication systems and software and hardware products, including those of external providers, to conduct business. These systems and software and hardware impact, among other things, ordering and managing components of Bioventus’ products from suppliers, shipping products to customers on a timely basis, processing transactions, coordinating its sales activities across all of its products, summarizing and reporting results of operations, complying with regulatory, legal or tax requirements, data security and other processes necessary to manage its business.

Despite any precautions Bioventus may take, Bioventus’ systems and software and hardware could be exposed to damage or interruption from circumstances beyond its control, such as fire, natural disasters, systems failures, power outages, cyber-attacks, terrorism, energy loss, telecommunications failure, security breaches and attempts

 

71


Table of Contents

thereof, computer viruses and similar disruptions affecting the global Internet. Although Bioventus has taken steps to prevent system failures and have back-up systems and procedures to prevent or reduce disruptions, such steps may not prevent an interruption of services and Bioventus’ disaster recovery planning may not be adequate or account for all contingencies. Additionally, Bioventus’ insurance may not adequately compensate Bioventus for all losses or failures that may occur. If Bioventus’ systems or software and hardware are damaged or cease to function properly and Bioventus’ business continuity plans do not effectively compensate on a timely basis, Bioventus may suffer interruptions in Bioventus’ operations, which could adversely affect its business, results of operations and financial condition.

Bioventus will need to improve and upgrade Bioventus’ systems and infrastructure as Bioventus’ operations grow in scale in order to maintain the reliability and integrity of Bioventus’ systems and infrastructure. The expansion of Bioventus’ systems and infrastructure will require Bioventus to commit substantial financial, operational and technical resources before the volume of Bioventus’ business increases, with no assurance that the volume of business will increase. Any service outages or delays due to the installation of any new or upgraded technology (and customer issues therewith), or the impact on the reliability of Bioventus’ data from any new or upgraded technology could adversely affect its business, results of operations and financial condition.

Bioventus’ business subjects Bioventus to economic, political, regulatory and other risks associated with international sales and operations that could adversely affect its business, results of operations and financial condition.

Since Bioventus sells Bioventus’ products in many different jurisdictions outside the United States, Bioventus’ business is subject to risks associated with conducting business internationally. Bioventus anticipates that net sales from international operations will continue to represent a portion of Bioventus’ total net sales. In addition, a number of Bioventus’ third-party manufacturing facilities and suppliers of Bioventus’ products are located outside the United States. Accordingly, Bioventus’ future results could be harmed by a variety of factors, including:

 

   

economic weakness, including inflation, or political instability in particular foreign economies and markets;

 

   

foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;

 

   

customers in some foreign countries potentially having longer payment cycles;

 

   

disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the U.S. Foreign Corrupt Practices Act (FCPA), regulations of the U.S. Office of Foreign Assets Controls, and U.S. anti-money laundering regulations, as well as exposure of Bioventus’ foreign operations to liability under these regulatory regimes;

 

   

training of third-parties on Bioventus’ products and the procedures in which they are used;

 

   

reduced protection for and greater difficulty enforcing Bioventus’ intellectual property rights;

 

   

unexpected changes in tariffs, trade barriers and regulatory requirements, export licensing requirements or other restrictive actions by foreign governments;

 

   

difficulty in staffing and managing widespread operations, including compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

 

   

foreign taxes, including withholding of payroll taxes;

 

   

workforce uncertainty in countries where labor unrest is more common than in the United States;

 

   

international regulators and third-party payers requiring additional clinical studies prior to approving or allowing reimbursement for Bioventus’ products;

 

72


Table of Contents
   

complexities associated with managing multiple payer reimbursement regimes, government payers or patient self-pay systems;

 

   

production shortages resulting from any events affecting material supply or manufacturing capabilities abroad; and

 

   

business interruptions resulting from geopolitical actions, including war and terrorism, global pandemics or natural disasters including earthquakes, typhoons, floods and fires.

In addition, further expansion into new international markets may require significant resources and the efforts and attention of Bioventus’ management and other personnel, which may divert resources from its existing business operations. As Bioventus expands its business internationally, Bioventus’ success will depend, in large part, on its ability to anticipate and effectively manage these and other risks associated with its operations outside of the United States.

Bioventus is exposed to foreign currency risks, which may adversely affect its business, results of operations and financial condition.

External events such as the withdrawal by the United Kingdom from the EU, global pandemics, the ongoing uncertainty regarding actual and potential shifts in U.S. and foreign trade, economic and other policies and the passage of U.S. taxation reform legislation each have caused, and may continue to cause, significant volatility in currency exchange rates. Because some of Bioventus’ revenue, expenses, assets and liabilities are denominated in foreign currencies, Bioventus is subject to exchange rate and currency risks. In preparing Bioventus’ financial statements, which are presented in U.S. dollars, Bioventus must convert all non-U.S. dollar financial results to U.S. dollars at varying exchange rates. This may ultimately result in currency gain or loss, the outcome of which Bioventus cannot predict. Furthermore, to the extent that Bioventus incurs expenses or earn revenue in currencies other than in U.S. dollars, any change in the values of those foreign currencies relative to the U.S. dollar could cause Bioventus’ profits to decrease or its products to be less competitive against those of its competitors. To the extent that Bioventus’ current assets denominated in foreign currency are greater or less than its current liabilities denominated in foreign currencies, Bioventus faces potential foreign exchange exposure.

To minimize such exposures, Bioventus has entered, and may in the future enter, into derivative instruments related to forecasted foreign currency transactions or currency hedges from time to time. Losses from changes in the value of the Euro or other foreign currencies relative to the U.S. dollar could adversely affect its business, results of operations and financial condition.

Bioventus is subject to differing tax rates in several jurisdictions in which Bioventus operates, which may adversely affect its business, results of operations and financial condition.

Bioventus will be subject to taxes in the United States and certain foreign jurisdictions. Due to economic and political conditions, tax rates in various jurisdictions, including the United States, may be subject to change. Bioventus’ future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities and changes in tax laws or their interpretation. In addition, Bioventus may be subject to income tax audits by various tax jurisdictions. Although Bioventus believes its income tax liabilities are reasonably estimated and accounted for in accordance with applicable laws and principles, an adverse resolution by one or more taxing authorities could have a material impact on the results of Bioventus’ operations.

International tariffs applied to goods traded between the United States and China may adversely affect its business, results of operations and financial condition.

International tariffs, including tariffs applied to goods traded between the United States and China, may adversely affect its business, results of operations and financial condition. Since the beginning of 2018, there has

 

73


Table of Contents

been increasing rhetoric, in some cases coupled with legislative or executive action, from several U.S. and foreign leaders regarding the possibility of instituting tariffs against foreign imports of certain materials. More specifically, in March and April of 2018, the U.S. and China applied tariffs to certain of each other’s exports. The institution of trade tariffs both globally and between the U.S. and China specifically carries the risk of adversely affecting overall economic condition, which could have a negative impact on Bioventus as imposition of tariffs could cause an increase in the cost of Bioventus’ products and the components for Bioventus’ products, specifically with respect to Bioventus’ Exogen system, which may adversely affect its business, results of operations and financial condition.

The 2019 Credit Agreement contains financial and operating restrictions that may limit Bioventus’ access to credit. If Bioventus fails to comply with financial or other covenants in the 2019 Credit Agreement, it may be required to repay indebtedness to its existing lenders, which may harm Bioventus’ liquidity.

On December 6, 2019, Bioventus entered into a $250.0 million credit and guaranty agreement, or the 2019 Credit Agreement, with Wells Fargo Bank National Association, as administrative agent and collateral agent, and a syndicate of other entities as lenders. As of December 31, 2020, Bioventus had outstanding indebtedness of $190.0 million under its term loan (leaving $49.9 million available under Bioventus’ revolving credit facility after giving effect to $0.1 million in an outstanding letter of credit). Bioventus is subject to certain covenants under the 2019 Credit Agreement, including, but not limited to:

 

   

a minimum interest coverage ratio and a maximum debt leverage ratio requirement as defined in Bioventus’ credit agreement;

 

   

restrictions on the declaration or payment of certain distributions on or in respect of Bioventus’ equity interests;

 

   

restrictions on acquisitions, investments and certain other payments;

 

   

limitations on the incurrence of new indebtedness;

 

   

limitations on the incurrence of new liens on property or assets;

 

   

limitations on transfers, sales and other dispositions;

 

   

limitations on entering into transactions with affiliates; and

 

   

limitations on making any material change in any of Bioventus’ business objectives that could reasonably be expected to have a material adverse effect on the repayment of Bioventus’ credit agreement.

Such indebtedness could have significant consequences, including:

 

   

requiring a substantial portion of Bioventus’ cash flows to be dedicated to debt service payments instead of funding growth, working capital, capital expenditures, investments or other cash requirements;

 

   

reducing Bioventus’ flexibility to adjust to changing business conditions or obtain additional financing;

 

   

exposing Bioventus to the risk of increased interest rates as certain of Bioventus’ borrowings, including borrowings under Bioventus’ term loan, are at variable rates, making it more difficult for Bioventus to make payments on Bioventus’ indebtedness;

 

   

restricting Bioventus from making strategic acquisitions or causing Bioventus to make non-strategic divestitures;

 

   

subjecting Bioventus to restrictive covenants that may limit Bioventus’ flexibility in operating Bioventus’ business; and

 

   

limiting Bioventus’ ability to obtain additional financing for working capital, capital expenditures, debt service requirements and general corporate or other purposes.

 

74


Table of Contents

In addition, Bioventus may not be able to comply with these financial covenants described above in the future. In the absence of a waiver from Bioventus’ lenders, any failure by Bioventus to comply with these covenants in the future may result in the declaration of an event of default, which could adversely affect Bioventus’ business, results of operations and financial position. See Bioventus’ Management’s Discussion and Analysis—Indebtedness.”

Uncertainty relating to the LIBOR calculation process and potential phasing out of LIBOR in the future may adversely affect Bioventus’ financing costs.

Currently, the 2019 Credit Agreement utilizes the London Interbank Offered Rate (LIBOR), or various alternative methods set forth in the 2019 Credit Agreement to calculate interest on any borrowings. National and international regulators and law enforcement agencies have conducted investigations into a number of rates or indices known as “reference rates.” Actions by such regulators and law enforcement agencies may result in changes to the manner in which certain reference rates are determined, their discontinuance or the establishment of alternative reference rates. In particular, on July 27, 2017, the Chief Executive of the United Kingdom Financial Conduct Authority (FCA), which regulates LIBOR, announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021 or, in certain cases, 2023, pursuant to an updated announcement in November 2020. Such announcements indicate that the continuation of LIBOR on the current basis cannot and will not be guaranteed after such dates, as applicable, and it appears highly likely that LIBOR will be discontinued or modified by 2021 or, in certain cases 2023.

At this time, it is not possible to predict the effect that these developments, any discontinuance, modification or other reforms to LIBOR or any other reference rate, or the establishment of alternative reference rates may have on LIBOR, other benchmarks or LIBOR-based debt instruments. Uncertainty as to the nature of such potential discontinuance, modification, alternative reference rates or other reforms could cause the interest rates calculated for the 2019 Credit Agreement to be materially different than expected, which could have a material adverse effect on Bioventus’ financing costs.

Due to the high degree of uncertainty regarding the implementation and impact of the CARES Act and other legislation related to COVID-19, there can be no assurance as to the total amount of financial assistance Bioventus will receive or that Bioventus will be able to comply with the applicable terms and conditions for retaining such assistance.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, and modifications to the net interest deduction limitations. The CARES Act and similar legislation intended to provide assistance related to the COVID-19 pandemic also authorized $175.0 billion in funding to be distributed by HHS to eligible health care providers. This funding, known as the Provider Relief Fund, is designated to fund eligible healthcare providers’ healthcare-related expenses or lost revenues attributable to COVID-19. On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law, which adds $3.0 billion to the Provider Relief Fund. Payments from the Provider Relief Fund are subject to certain eligibility criteria, as well as reporting and auditing requirements, but do not need to be repaid to the U.S. government if recipients comply with the applicable terms and conditions.

In reliance on the CARES Act, Bioventus deferred its employer social security payroll tax payments from May 2020 until the remainder of the 2020 calendar year of which, 50% is deferred until December 31, 2021, with the remaining 50% deferred until December 31, 2022. The Company has deferred $1.9 million of payroll tax payments as of December 31, 2020, half of which has been recorded in accrued liabilities and the remainder in other long-term liabilities on the condensed consolidated balance sheet. Bioventus is in the process of analyzing

 

75


Table of Contents

other provision of the CARES Act to determine the financial impact on Bioventus’ condensed consolidated financial statements.

In April 2020, Bioventus received, without request, a $1.2 million payment from the Provider Relief Fund from HHS. Bioventus determined that it complied with the conditions to be able to keep and use the funds as reimbursement for health care related expenses and lost revenue attributable to the public health emergency resulting from COVID-19 and submitted to HHS the required attestation to agree to the applicable terms and conditions of the Provider Relief Fund Phase I General Distribution. In July 2020, Bioventus applied for and received a second Provider Relief Fund payment totaling $2.9 million, which is subject to the same conditions as the initial payment. The payments were recorded as other income on the condensed consolidated statement of operations and comprehensive income (loss) for year ended December 31, 2020.

Due to the high degree of uncertainty regarding the implementation of the CARES Act, the Consolidated Appropriations Act, 2021 and other stimulus legislation, there can be no assurance that the terms and conditions of the Provider Relief Fund or other relief programs will not change or be interpreted in ways that affect Bioventus’ ability to comply with such terms and conditions in the future, which could affect Bioventus’ ability to retain such assistance. Bioventus will continue to monitor its compliance with the terms and conditions of the Provider Relief Fund, including demonstrating that the distributions received have been used for healthcare-related expenses or lost revenue attributable to COVID-19. If Bioventus is unable to comply with current or future terms and conditions, Bioventus’ ability to retain some or all of the distributions received may be impacted, and Bioventus may be subject to actions including payment recoupment, audits and inquiries by governmental authorities, and criminal, civil or administrative penalties.

Bioventus’ future capital needs are uncertain and Bioventus may need to raise additional funds in the future, and such funds may not be available on acceptable terms or at all.

Bioventus believes that its current cash and cash equivalents, in combination with the borrowing availability under Bioventus’ credit facility and its expected cash from operations, will be sufficient to meet Bioventus’ projected operating requirements for the foreseeable future. However, Bioventus may seek additional funds from public and private stock offerings, borrowings under Bioventus’ existing or new credit facilities or other sources in order to fund future initiatives related to the expansion of Bioventus’ business, which financing may not be available on acceptable or commercially reasonable terms, if at all. For example, pursuant to the Option and Equity Purchase Agreement with CartiHeal and its shareholders, CartiHeal has a put option that, if validly exercised, would require BV LLC to purchase 100% of CartiHeal’s shares for $350.0 million following pivotal clinical trial success, including achievement of certain secondary endpoints and FDA approval of the Agili-C device with a label consistent in all respects with pivotal clinical trial success, pursuant to the terms and subject to the conditions of the Option and Equity Purchase Agreement. See Bioventus’ Management’s Discussion and Analysis—Strategic transactions—CartiHeal (developer of Agili-C) investment and option and equity purchase agreement.”

Furthermore, if Bioventus issues equity or debt securities to raise additional capital, its existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of Bioventus’ existing stockholders. In addition, if Bioventus raises additional capital through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to Bioventus’ products, potential products or proprietary technologies, or grant licenses on terms that are not favorable to Bioventus. If Bioventus cannot raise capital on acceptable terms, it may not be able to develop or enhance Bioventus’ products, execute Bioventus’ business plan, take advantage of future opportunities, or respond to competitive pressures, changes in Bioventus’ supplier relationships, or unanticipated customer requirements. Any of these events could adversely affect its business, results of operations and financial condition.

 

76


Table of Contents

Risks Relating to Government Regulation

The risk factors listed below describe the risks Bioventus faces related to government regulation. The companies who manufacture or produce certain of the products Bioventus distributes face similar risks with respect to government regulation relating to such products. If such suppliers are unable to comply with government regulations, they may not be able to continue to supply Bioventus with products, which could adversely affect its business, results of operations and financial condition.

Bioventus’ products and operations are subject to extensive governmental regulation, and its failure to comply with applicable requirements could cause its business to suffer.

The healthcare industry, and in particular the medical device industry, are regulated extensively by governmental authorities, principally the FDA and corresponding state and foreign regulatory agencies and authorities. The FDA and other U.S. and foreign governmental agencies and authorities regulate and oversee, among other things:

 

   

design, development and manufacturing;

 

   

testing, labeling, content and language of instructions for use and storage;

 

   

clinical trials;

 

   

product safety;

 

   

marketing, sales and distribution;

 

   

premarket clearance and approval;

 

   

conformity assessment procedures;

 

   

record-keeping procedures;

 

   

advertising and promotion;

 

   

recalls and other field safety corrective actions;

 

   

postmarket surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury;

 

   

postmarket studies; and

 

   

product import and export.

The regulations to which Bioventus is subject are complex and have tended to become more stringent over time. Regulatory changes could result in restrictions on Bioventus’ ability to carry on or expand its operations, higher than anticipated costs or lower than anticipated sales.

The failure to comply with applicable regulations could jeopardize Bioventus’ ability to sell its products and result in enforcement actions such as:

 

   

administrative or judicially imposed sanctions;

 

   

unanticipated expenditures to address or defend such actions;

 

   

injunctions, consent decrees or the imposition of civil penalties or fines;

 

   

recall or seizure of Bioventus’ products;

 

   

total or partial suspension of production or distribution;

 

   

refusal to grant pending or future clearances or approvals for Bioventus’ products;

 

   

withdrawal or suspension of regulatory clearances or approvals;

 

77


Table of Contents
   

clinical holds;

 

   

untitled letters or warning letters;

 

   

refusal to permit the import or export of Bioventus’ products; and

 

   

criminal prosecution of Bioventus or Bioventus’ employees.

Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and harm Bioventus’ reputation, business, results of operations and financial condition.

Moreover, governmental authorities outside the United States have become increasingly stringent in their regulation of medical devices, and Bioventus’ products may become subject to more rigorous regulation by non U.S. governmental authorities in the future. U.S. or non-U.S. government regulations may be imposed in the future that adversely affect its business, results of operations and financial condition. The European Commission has harmonized national regulations for the control of medical devices through European Medical Device Directives with which manufacturers must comply. Under these new regulations, manufacturing plants must have received a full Quality Assurance Certification from a “Notified Body” in order to be able to sell products within the member states of the EU. This certification allows manufacturers to stamp the products of certified plants with a “CE” mark. Products covered by European Commission regulations that do not bear the CE mark cannot be sold or distributed within the EU. Bioventus has received certification for all of Bioventus’ manufacturing facilities.

Bioventus may be subject to enforcement action if it engages in improper claims submission practices and resulting audits or denials of Bioventus’ claims by government agencies could reduce Bioventus’ net sales or profits.

In connection with its Exogen system, Bioventus submits claims directly to, and receive payments directly from, the Medicare and Medicaid programs and private payers. Therefore, Bioventus is subject to extensive government regulation, including detailed requirements for submitting claims under appropriate codes and maintaining certain documentation, including evidence that all medical necessity requirements are met to support Bioventus’ claims. Billing for Bioventus’ Exogen system is complex, time-consuming and expensive, particularly for items and services provided to government healthcare program beneficiaries, such as Medicare and Medicaid. Reimbursement claims may be adversely affected by improper completion of the CMN required in connection with Medicare claims for the Exogen system and Bioventus may be subject to investigations by governmental authorities or third party payers and required to prove the validity of the claims or the authenticity of the signatures on the CMNs under investigation. Reimbursement claims may also be adversely affected by the promotion of Bioventus’ devices for unapproved or off-label uses or assistance with the reimbursement process that could result in false or fraudulent claims for reimbursement being submitted to government or private payers. Depending on the billing arrangement and applicable law, Bioventus bills various payers, all of which may have different prior authorization, patient qualification and medical necessity requirements, as well as patients for any applicable co-payments or co-insurance amounts. In addition, Bioventus may also face increased risk in Bioventus’ collection efforts, including potential write-offs of doubtful accounts and long collection cycles, any of which could adversely affect its business, results of operations and financial condition.

Bioventus is also required to implement compliance procedures and oversight, train and monitor Bioventus’ employees, appeal coverage and payment denials, and perform internal audits periodically to assess compliance with applicable laws and regulations as well as internal compliance policies and procedures. Bioventus is required to report and return any overpayments received from government payers within 60 days of identification and exercise of reasonable diligence to investigate credible information regarding potential overpayments. Failure to identify and return such overpayments exposes the provider or supplier to liability under federal false claims laws. See Risk Factors—Risks Relating to Government Regulation.Bioventus is subject to federal, state and foreign laws and regulations relating to Bioventus’ healthcare business, and could face substantial

 

78


Table of Contents

penalties if Bioventus is determined not to have fully complied with such laws, which would adversely affect its business, results of operations and financial condition. Moreover, Medicare contractors and Medicaid agencies periodically conduct pre- and post-payment reviews and other audits of claims and are under increasing pressure to more closely scrutinize healthcare claims and supporting documentation. Bioventus may be subject to prepayment and post-payment reviews, as well as audits of claims in the future. Private payers may from time to time conduct similar reviews and audits. Any third-party payer reviews and audits of Bioventus’ claims could result in material delays in payment, material recoupments, overpayments, claim denials, fines, revocations of billing privileges, bars on re-enrollment in federal or state healthcare programs, cancellation of Bioventus’ agreements or damage to Bioventus’ reputation, any of which would reduce its net sales and profitability.

For example, in July of 2018 Bioventus became aware of allegations that certain of Bioventus’ sales personnel may have been completing Section B of the CMN required in connection with Medicare claims for the Exogen system, which, under federal law, must be completed by the physician and/or physician staff. Together with Bioventus’ outside counsel, Ropes & Gray LLP, Bioventus initiated an investigation into these allegations, and Bioventus determined that the CMN forms for a portion of Medicare claims for the Exogen system were in fact improperly completed by Bioventus’ sales representatives, some of which also failed to meet CMS coverage requirements. As a result of its findings, Bioventus made a self-disclosure on November 30, 2018 to the OIG, under the Provider Self-Disclosure Protocol. Bioventus’ self-disclosure disclosed the extent of its findings relating to the inappropriate completion of CMN forms by its sales personnel and offered to make repayment for such claims which failed to meet CMS coverage requirements and which Bioventus submitted to the Medicare program between October 1, 2012 and September 30, 2018, the statutory period applicable to such conduct. The total value of impacted claims was $30.1 million in the aggregate. In October 2019, Bioventus’ outside counsel received a letter from the Office of the United States Attorney in the Middle District of North Carolina (USAO), stating that the USAO would be working with the OIG to resolve Bioventus’ self-disclosure. After settlement discussions with the USAO and OIG, on January 25, 2021 Bioventus reached a settlement agreement with the USAO and the OIG with respect to the submission of Medicare claims that did not meet CMS coverage requirements and for which Bioventus’ sales representatives completed Section B of the CMN forms. On February 22, 2021, Bioventus finalized all terms related to the settlement and entered into a formal settlement agreement with the USAO and OIG consistent with Bioventus’ previous agreement in principle and which included releases from associated False Claims Act liability and further Civil Monetary Penalties that are customary in self-disclosures of this type. Under the agreement, Bioventus resolved the potential liability related to Bioventus’ self-disclosure for $3.6 million, of which $2.4 million had already been paid through Bioventus’ 2019 return of overpayments described previously, leaving a net payment to be made of $1.2 million. Bioventus made payment of the $1.2 million net settlement amount due under the agreement on February 23, 2021. The settlement amount noted above was recorded in the consolidated financial statements for the year ended December 31, 2020. In connection with this settlement, Bioventus was not subjected to any non-monetary penalties, such as monitoring agreements or requirements to conduct audits and submit reports to the HHS.

The FDA regulatory process is expensive, time-consuming and uncertain, and the failure to obtain and maintain required regulatory clearances and approvals could prevent Bioventus from commercializing its products.

Before Bioventus can market or sell a new medical device or other product or a new use of or a claim for or significant modification to an existing medical device in the United States, Bioventus must obtain either clearance from the FDA under 510(k) pathway or approval of a PMA, unless an exemption applies. In the United States, Bioventus has obtained 510(k) premarket clearance from the FDA to market products such as Signafuse Bioactive Bone Graft Putty, Interface Bioactive Bone Graft and Signafuse Mineralized Collagen Scaffold. Bioventus’ pain treatment and joint preservation products, including Durolane, GELSYN-3 and SUPARTZ FX, and its Exogen system, have obtained PMA approval. In the 510(k) clearance process, before a device may be marketed, the FDA must determine that a proposed device is “substantially equivalent” to a legally-marketed “predicate” device, which includes a device that has been previously cleared through the 510(k) process, a device that was legally marketed prior to May 28, 1976 (preamendments device), a device that was originally on the

 

79


Table of Contents

U.S. market pursuant to an approved PMA application and later downclassified, or a 510(k)-exempt device. To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data are sometimes required to support substantial equivalence. In the PMA process, the FDA must determine that a proposed product is safe and effective for Bioventus’ intended use based, in part, on extensive data, including, but not limited to, technical, preclinical, clinical trial, manufacturing and labeling data. The PMA process is typically required for products that are deemed to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices.

Modifications to products that are approved through a PMA application generally require FDA approval. Similarly, certain modifications made to products cleared through a 510(k) may require a new 510(k) clearance. Both the PMA approval and the 510(k) clearance process can be expensive, lengthy and uncertain. The FDA’s 510(k) clearance process usually takes from three to twelve months, but can last longer. The process of obtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes from six to 18 months, or even longer, from the time the application is filed with the FDA. In addition, a PMA generally requires the performance of one or more clinical trials. Despite the time, effort and cost, Bioventus cannot assure you that any particular device will be approved or cleared by the FDA. Any delay or failure to obtain necessary regulatory approvals could harm Bioventus’ business.

Any modification to one of Bioventus’ 510(k) cleared products that would constitute a major change in its intended use, or any change that could significantly affect the safety or effectiveness of the device would require Bioventus to obtain a new 510(k) marketing clearance and may even, in some circumstances, require the submission of a PMA application, if the change raises complex or novel scientific issues or the product has a new intended use. The FDA requires every manufacturer to make the determination regarding the need for a new 510(k) submission in the first instance, but the FDA may review any manufacturer’s decision. Bioventus may make changes to its 510(k)-cleared products in the future that it may determine do not require a new 510(k) clearance or PMA approval. If the FDA disagrees with Bioventus’ decision not to seek a new 510(k) or PMA approval for changes or modifications to existing devices and requires new clearances or approvals, Bioventus may be required to recall and stop marketing its products as modified, which could require Bioventus to redesign its products, conduct clinical trials to support any modifications, and pay significant regulatory fines or penalties. If there is any delay or failure in obtaining required clearances or approvals or if the FDA requires Bioventus to go through a lengthier, more rigorous examination for future products or modifications to existing products than Bioventus had expected, its ability to introduce new or enhanced products in a timely manner would be adversely affected, which in turn would result in delayed or no realization of revenue from such product enhancements or new products and could also result in substantial additional costs which could decrease Bioventus’ profitability.

The FDA can delay, limit or deny clearance or approval of a device for many reasons, including:

 

   

Bioventus may not be able to demonstrate to the FDA’s satisfaction that the product or modification is substantially equivalent to the proposed predicate device or safe and effective for its intended use;

 

   

the data from Bioventus’ preclinical studies and clinical trials may be insufficient to support clearance or approval, where required; and

 

   

the manufacturing process or facilities Bioventus uses may not meet applicable requirements.

In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay approval or clearance of Bioventus’ future products under development or impact its ability to modify its currently cleared or approved products on a timely basis. Even after clearance or approval for Bioventus’ products is obtained, Bioventus and the products are subject to extensive postmarket regulation by the FDA, including with respect to advertising, marketing, labeling, manufacturing, distribution, import, export, and clinical evaluation. For example, as a condition of approving a

 

80


Table of Contents

PMA application, the FDA may require some form of post-approval study or post-market surveillance, whereby the applicant conducts a follow-up study or follows certain patient groups for a number of years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the public health or to provide additional safety and effectiveness data for the device. The product labeling must be updated and submitted in a PMA supplement once results, including any adverse event data from the post-approval study, become available. Failure to conduct post-approval studies in compliance with applicable regulations or to timely complete required post-approval studies or comply with other post-approval requirements could result in withdrawal of approval of the PMA, which would harm Bioventus’ business.

Bioventus is also required to timely file various reports with regulatory agencies. If these reports are not timely filed, regulators may impose sanctions and sales of Bioventus’ products may suffer, and Bioventus may be subject to product liability or regulatory enforcement actions, all of which could harm Bioventus’ business. In addition, if Bioventus initiates a correction or removal for one of its devices, issue a safety alert, or undertake a field action or recall to reduce a risk to health posed by the device, Bioventus may be required to submit a report to the FDA, and in many cases, to other regulatory agencies. Such reports could lead to increased scrutiny by the FDA, other international regulatory agencies and Bioventus’ customers regarding the quality and safety of its devices and to negative publicity, including FDA alerts, press releases, or administrative or judicial actions. Furthermore, the submission of these reports has been and could be used by competitors against Bioventus in competitive situations and cause customers to delay purchase decisions or cancel orders, which would harm Bioventus’ reputation and business.

The FDA and state authorities have broad enforcement powers. Bioventus’ failure to comply with applicable regulatory requirements could result in enforcement action by the FDA or state agencies, which may include any of the following sanctions:

 

   

adverse publicity, warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties;

 

   

repair, replacement, refunds, recalls, termination of distribution, administrative detention or seizures of Bioventus’ products;

 

   

operating restrictions, partial suspension or total shutdown of production;

 

   

customer notifications or repair, replacement or refunds;

 

   

refusing Bioventus’ requests for 510(k) clearance or PMA approvals or foreign regulatory approvals of new products, new intended uses or modifications to existing products;

 

   

withdrawals of current 510(k) clearances or PMAs or foreign regulatory approvals, resulting in prohibitions on sales of Bioventus’ products;

 

   

FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and

 

   

criminal prosecution.

Any of these sanctions could also result in higher than anticipated costs or lower than anticipated sales and adversely affect its business, results of operations and financial condition.

In addition, the FDA’s and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of Bioventus’ product candidates. If Bioventus is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if it is not able to maintain regulatory compliance as a result of a changing regulatory landscape, Bioventus may lose any marketing approvals or clearances that Bioventus has already obtained or fail to obtain new marketing approvals or clearances, and Bioventus may not be able to achieve or sustain profitability, which would adversely affect Bioventus’ business, prospects, financial condition and results of operations.

 

81


Table of Contents

Bioventus also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. The results of the 2020 Presidential election may impact Bioventus’ business and industry. Moreover, the Trump administration took several executive actions, including the issuance of a number of Executive Orders, that could impose significant burdens on, or otherwise materially delay, FDA’s ability to engage in routine regulatory and oversight activities such as implementing statutes through rule making, issuance of guidance, and review and approval of marketing applications. It is difficult to predict whether or how these executive actions, including the Executive Orders, will be implemented, or whether they will be rescinded or replaced under the Biden administration. The policies and priorities of an incoming administration are unknown and could materially impact the regulatory framework governing Bioventus’ products.

Once obtained, Bioventus cannot guarantee that FDA or international product approvals will not be withdrawn or rescinded or that relevant regulatory authorities will not require other corrective action, and any withdrawal, rescission or corrective action could materially affect Bioventus’ business and financial results.

Once obtained, marketing approval can be withdrawn by the FDA or comparable foreign regulatory authorities for a number of reasons, including the failure to comply with ongoing regulatory requirements or the occurrence of unforeseen problems following initial approval. Regulatory authorities could also limit or prevent the manufacture or distribution of Bioventus’ products. Any regulatory limitations on the use of Bioventus’ products or any withdrawal, suspension or rescission of approval by the FDA or a comparable foreign regulatory authority could have a material adverse effect on its business, financial condition, and results of operations.

Legislative or regulatory reforms, including those currently under consideration by FDA, could make it more difficult or costly for Bioventus to obtain regulatory clearance or approval of any future products and to manufacture, market and distribute its products after clearance or approval is obtained, which could adversely affect its competitive position and materially affect Bioventus’ business and financial results.

From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulatory clearance or approval, manufacture and marketing of regulated products or the reimbursement thereof. In addition, FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, propose new reclassification orders, or take other actions, which may prevent or delay approval or clearance of Bioventus’ future products under development or impact Bioventus’ ability to market or modify its currently cleared products on a timely basis. FDA and foreign regulations depend heavily on administrative interpretation, and Bioventus cannot assure you that future interpretations made by the FDA or other regulatory bodies, with possible retroactive effect, will not adversely affect Bioventus. Additionally, any changes, whether in interpretation or substance, in existing regulations or policies, or any future adoption of new regulations or policies by relevant regulatory bodies, could prevent or delay approval of Bioventus’ products. In the event Bioventus’ future, or current, products, including HA generally, are classified, or re-classified, as human drugs, combination products, or biologics by the FDA or an applicable international regulatory body, the applicable review process related to such products is typically substantially longer and substantially more expensive than the review process to which they are currently subject as medical devices. In 2018, FDA publicly indicated its intent to consider HA products for certain indications as drugs and has indicated that sponsors of HA products who submit PMAs or PMA supplements for changes in indications for use, formulation or route of administration should obtain an informal or formal classification and jurisdictional determination through a pre-request for determination or request for determination prior to submission. There exists uncertainty with respect to the final interpretation, implementation, and consequences of this development, and this or any other potential regulatory changes in approach or interpretation similar in substance to those mentioned in this paragraph and affecting Bioventus’ products could materially impact its competitive position, business, and financial results.

Moreover, over the last several years, the FDA has proposed reforms to its 510(k) clearance process, and such proposals could include increased requirements for clinical data and a longer review period, or could make it

 

82


Table of Contents

more difficult for manufacturers to utilize the 510(k) clearance process for their products. For example, in November 2018, FDA officials announced forthcoming steps that the FDA intends to take to modernize the premarket notification pathway under Section 510(k) of the FDCA. Among other things, the FDA announced that it planned to develop proposals to drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates. These proposals included plans to potentially sunset certain older devices that were used as predicates under the 510(k) clearance pathway, and to potentially publish a list of devices that have been cleared on the basis of demonstrated substantial equivalence to predicate devices that are more than 10 years old. The FDA also announced that it intended to finalize guidance to establish a premarket review pathway for “manufacturers of certain well-understood device types” as an alternative to the 510(k) clearance pathway and that such premarket review pathway would allow manufacturers to rely on objective safety and performance criteria recognized by the FDA to demonstrate substantial equivalence, obviating the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearance process.

In May 2019, the FDA solicited public feedback on its plans to develop proposals to drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates, including whether the FDA should publish a list of devices that have been cleared on the basis of demonstrated substantial equivalence to predicate devices that are more than 10 years old. The FDA requested public feedback on whether it should consider certain actions that might require new authority, such as whether to sunset certain older devices that were used as predicates under the 510(k) clearance pathway. These proposals have not yet been finalized or adopted, and the FDA may work with Congress to implement such proposals through legislation. Accordingly, it is unclear the extent to which any proposals, if adopted, could impose additional regulatory requirements on Bioventus that could delay its ability to obtain new 510(k) clearances, increase the costs of compliance, or restrict Bioventus’ ability to maintain its current clearances, or otherwise create competition that may negatively affect its business.

More recently, in September 2019, the FDA finalized the aforementioned guidance to describe an optional “safety and performance based” premarket review pathway for manufacturers of “certain, well-understood device types” to demonstrate substantial equivalence under the 510(k) clearance pathway, by demonstrating that such device meets objective safety and performance criteria established by the FDA, obviating the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearance process. The FDA intends to maintain a list device types appropriate for the “safety and performance based pathway” and develop product-specific guidance documents that identify the performance criteria for each such device type, as well as the testing methods recommended in the guidance, where feasible. The FDA may establish performance criteria for classes of devices for which Bioventus or Bioventus’ competitors seek or currently has received clearance, and it is unclear the extent to which such performance standards, if established, could impact its ability to obtain new 510(k) clearances or otherwise create competition that may negatively affect its business.

In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect Bioventus’ business and its products. Any new statutes, regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of any future products or make it more difficult to obtain clearance or approval for, manufacture, market or distribute Bioventus’ products. Bioventus cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on Bioventus’ business in the future. Such changes could, among other things, require: additional testing prior to obtaining clearance or approval; changes to manufacturing methods; recall, replacement or discontinuance of Bioventus’ products; or additional record keeping. Additionally, the implementation of the new EU MDR set to take full effect on May 26, 2021 after a one-year postponement due to the COVID-19 pandemic, is expected to change several aspects of the existing regulatory framework in Europe. Specifically, the EU MDR will require changes in the clinical evidence required for medical devices, post-market clinical follow-up evidence, annual reporting of safety information for Class III products, and bi-annual reporting for Class II products, Unique Device Identification (UDI) for all products, submission of core data elements to a European UDI database prior to placement of a device on the market, reclassification of medical devices, and multiple other labeling changes. While Bioventus will be able to continue

 

83


Table of Contents

marketing its currently CE-marked products in the EEA after the EU MDR enters into full effect and until the associated CE mark certificates expire, acquiring approvals for new products or renewing Bioventus’ existing CE mark certificates once these expire could be more challenging and costly.

Bioventus’ HCT/P products are subject to extensive government regulation and Bioventus’ failure to comply with these requirements could cause its business to suffer.

In the United States, Bioventus sells human tissue-derived BGSs, such as PureBone and OsteoAMP, which are referred to by the FDA as human cells, tissues and cellular or tissue-based products, or HCT/Ps. In the U.S., Bioventus is marketing its HCT/Ps pursuant to Section 361 of the PHSA and 21 CFR Part 1271 of FDA’s regulations. Bioventus does not manufacture these HCT/P products, but serve as a distributor for them. So-called Section 361 HCT/Ps are not currently subject to the FDA requirements to obtain marketing authorizations as long as they meet certain criteria provided in FDA’s regulations. HCT/Ps regulated as “361 HCT/Ps” are currently subject to requirements relating to registering facilities and listing products with the FDA, screening and testing for tissue donor eligibility, cGTP, when processing, storing, labeling and distributing HCT/Ps, including required labeling information, stringent record keeping and adverse event reporting. If Bioventus or Bioventus’ suppliers fail to comply with these requirements, Bioventus could be subject to FDA enforcement action, including, for example, warning letters, fines, injunctions, product recalls or seizures, and, in the most serious cases, criminal penalties. To be regulated as Section 361 HCT/Ps, these products must meet FDA’s criteria to be considered “minimally manipulated” and intended for “homologous use,” among other requirements. HCT/Ps that do not meet the criteria to be considered Section 361 HCT/Ps are subject to the FDA’s regulatory requirements applicable to medical devices, biologics or drugs. Device, biologic or drug HCT/Ps must comply both with the requirements exclusively applicable to Section 361 HCT/Ps and, in addition, with other requirements, including requirements for marketing authorization. For example, Section 361 HCT/Ps do not require 510(k) clearance, PMA approval, approval of a BLA, or other premarket authorization from FDA before marketing. Except as described below with regard to MOTYS, Bioventus believes its HCT/Ps are regulated solely under Section 361 of the PHSA, and therefore, Bioventus has not sought or obtained 510(k) clearance, PMA approval, or licensure through a BLA for such HCT/Ps.

The FDA could disagree with Bioventus’ determination that these human tissue products are Section 361 HCT/Ps and could determine that these products are biologics requiring a BLA or medical devices requiring 510(k) clearance or PMA approval, and could require that Bioventus cease marketing such products and/or recall them pending appropriate clearance, approval or licensure from the FDA. For example, the FDA’s CDRH issued Bioventus a letter in March 2016 in which it asserted that OsteoAMP meets the definition of a medical device, and requested that Bioventus provide CDRH with information in support of its position that OsteoAMP does not require 510(k) clearance or PMA approval. Bioventus provided CDRH with the requested information in support of this position in May 2016 and Bioventus has received no further inquiries to date. Bioventus believes that CDRH’s assertion is unfounded and inconsistent with a 2011 letter from the FDA concluding that OsteoAMP meets the criteria for regulation solely as a Section 361 HCT/P. However, if the FDA were to disagree, and if Bioventus is otherwise unsuccessful in asserting its position, the FDA may then require that Bioventus obtains 510(k) clearance or PMA approval and that it ceases marketing OsteoAMP and/or recall OsteoAMP unless and until Bioventus receives clearance or approval. If Bioventus has to cease marketing and/or has to recall any of Bioventus’ BGSs products, including OsteoAmp, Bioventus’ net sales would decrease, which would adversely affect its business, results of operations and financial condition.

HCT/Ps that do not meet the criteria of Section 361 are regulated under Section 351 of the PHSA. Unlike Section 361 HCT/Ps, HCT/Ps regulated as “351” HCT/Ps are subject to premarket review and approval by the FDA. In November 2017, the FDA released a guidance document entitled “Regulatory Considerations for Human Cells, Tissues, and Cellular and Tissue—Based Products: Minimal Manipulation and Homologous Use—Guidance for Industry and Food and Drug Administration Staff.” The guidance outlined the FDA’s position that all lyophilized amniotic products are more than minimally manipulated and would therefore require a BLA to be lawfully marketed in the United States. The guidance also indicated that the FDA would exercise enforcement

 

84


Table of Contents

discretion, using a risk-based approach, with respect to the IND application and pre-market approval requirements for certain HCT/Ps for a period of 36 months from the issuance date of the guidance to allow manufacturers to pursue its IND application. Under this approach, FDA indicated that high-risk products and uses could be subject to immediate enforcement action; at that time FDA has not clearly stated what must happen by the end of its enforcement discretion period in order to avoid enforcement (i.e., whether a BLA must be approved by that time, or merely submitted). In July 2020, the FDA extended its period of enforcement discretion to May 31, 2021.

In light of the expiration of the enforcement discretionary period and FDA’s decision not to further extend it, Bioventus discontinued it limited marketing of MOTYS on May 31, 2021, which had commenced as Bioventus pursued marketing authorization under a BLA for the product, to avoid being subject to enforcement on the grounds that Bioventus was marketing a product at the same time Bioventus is investigating that product pursuant to an IND, in violation of FDA’s prohibition on the preapproval promotion of an investigational product. In addition, Bioventus expects the cost to manufacture Bioventus’ products will be higher than its other HCT/Ps because of the costs to comply with the more stringent requirements that apply to products regulated as biologics for which a BLA is required (and not just as Section 361 HCT/Ps). These requirements include satisfying cGMP manufacturing standards and performing ongoing product testing. If Bioventus does receive BLA approval for this product, changes such as adding new indications, manufacturing changes and additional labeling claims, will be subject to further testing requirements and FDA review and approval.

In addition, the FDA may in the future modify the scope of its enforcement discretion with respect to Section 361 HCT/Ps or change its position on which current or future products qualify as Section 361 HCT/Ps, or determine that some or all of Bioventus’ HCT/P products should not have been marketed under the FDA’s policy of enforcement discretion. Any regulatory changes could have adverse consequences for Bioventus and make it more difficult or expensive for Bioventus to conduct its business by requiring pre-market clearance or approval and compliance with additional post-market regulatory requirements with respect to those products.

If clinical studies of Bioventus’ future products do not produce results necessary to support regulatory clearance or approval in the United States or elsewhere, Bioventus will be unable to expand the indications for or commercialize these products.

Bioventus will likely need to conduct additional clinical studies in the future to support new indications for Bioventus’ products or for clearances or approvals of new product lines, or for the approval of the use of Bioventus’ products in some foreign countries. Clinical testing can take many years, can be expensive and carries uncertain outcomes. The initiation and completion of any of these studies may be prevented, delayed, or halted for numerous reasons. Conducting successful clinical studies requires the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit. Patient enrollment in clinical trials and completion of patient participation and follow-up depends on many factors, including the size of the patient population, the nature of the trial protocol, the attractiveness of, or the discomforts and risks associated with, the treatments received by enrolled subjects, the availability of appropriate clinical trial investigators and support staff, proximity of patients to clinical sites, patient ability to meet the eligibility and exclusion criteria for participation in the clinical trial and patient compliance. For example, patients may be discouraged from enrolling in Bioventus’ clinical trials if the trial protocol requires them to undergo extensive post-treatment procedures or follow-up to assess the safety and effectiveness of Bioventus’ products or if they determine that the treatments received under the trial protocols are not attractive or involve unacceptable risks or discomforts. Patients may also not participate in Bioventus’ clinical trials if they choose to participate in contemporaneous clinical trials of competitive products. In addition, patients participating in clinical trials may die before completion of the trial or suffer adverse medical events unrelated to investigational products.

For example, in late 2017 Bioventus began enrollment for the B.O.N.E.S. clinical study, a uniquely designed trial to further broaden the label of Bioventus’ Exogen system to include a fuller range of bones that may be treated as fresh fractures in predisposed patients at risk of nonunion. The B.O.N.E.S clinical study design includes

 

85


Table of Contents

prospective inclusion of 3,000 Exogen-treated patients presenting certain risk factors observed over the course of 12 months. In April 2021, Bioventus received a letter from the FDA identifying certain deficiencies in the PMA supplement for Exogen that must be addressed before the FDA can complete its review of the PMA supplement. The deficiencies include concerns about the data and endpoints from the B.O.N.E.S. study, and requests for re-analyses of certain data and provision of other information to support the findings. Bioventus continues to evaluate the FDA’s comments and are initiating discussions with them to address their concerns. See “Description of Bioventus’ Business—Development and Clinical Pipeline—Exogen clinical data—Ongoing Bioventus-sponsored clinical studies (B.O.N.E.S.).” If Bioventus is unable to successfully complete enrollment and conclude the B.O.N.E.S. study, or the data generated from the study does not support these new indications, future demand for Bioventus’ Exogen system may be affected. In October 2020, Bioventus received FDA confirmation indicating its authorization of its IND, which will allow Bioventus to conduct a clinical trial to support a BLA submission for MOTYS, as well as an additional clinical trial based on a registry of patients who received MOTYS during Bioventus’ limited commercial sale of the product, which has since been discontinued, or during the trial. If Bioventus is unable to complete enrollment of these trials or if these trials do not support Bioventus’ desired clinical indications for use or show clinical efficacy of the MOTYS product, Bioventus may not obtain approval of the BLA and may not be able to continue to sell MOTYS or obtain coverage or reimbursement for the product.

Clinical failure can occur at any stage of testing. Bioventus’ clinical studies may produce negative or inconclusive results, and Bioventus may decide, or regulators may require Bioventus, to conduct additional clinical and non-clinical studies in addition to those Bioventus has planned. In addition, failure to adequately demonstrate the safety and efficacy of any of Bioventus’ devices would prevent receipt of regulatory clearance or approval and, ultimately, the commercialization of that device or indication for use. Even if Bioventus’ future products are cleared in the United States, commercialization of Bioventus’ products in foreign countries would require approval by regulatory authorities in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional preclinical studies or clinical trials. Any of these occurrences could adversely affect its business, results of operations and financial condition.

Interim, “top-line” and preliminary data from Bioventus’ clinical trials that Bioventus announces or publishes from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, Bioventus may publish interim, “top-line” or preliminary data from its clinical trials. Interim, top-line, or preliminary data from clinical trials that Bioventus may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary, “top-line,” or interim data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data Bioventus previously published. As a result, interim, “top-line,” and preliminary data should be viewed with caution until the final data are available. Differences between preliminary, interim, or “top-line” data and final data could significantly harm Bioventus’ business prospects and may cause the trading price of its common stock to fluctuate significantly.

Further, others, including regulatory agencies, may not accept or agree with Bioventus’ assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and Bioventus’ business in general. In addition, the information Bioventus chooses to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what Bioventus determines is the material or otherwise appropriate information to include in its disclosure, and any information it determines not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product candidate or Bioventus’ business. If the interim, “top-line,” or preliminary data that Bioventus

 

86


Table of Contents

reports differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, its ability to obtain approval for and commercialize its product candidates, its business, operating results, prospects or financial condition may be harmed.

Bioventus may be subject to enforcement action if it engages in improper marketing or promotion of Bioventus’ products, and the misuse or off-label use of Bioventus’ products may harm its image in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies if Bioventus is deemed to have engaged in the promotion of these uses, any of which could be costly to Bioventus’ business.

The medical devices that Bioventus currently markets have been cleared or approved by the FDA and other foreign regulatory bodies for specific treatments. However, Bioventus cannot prevent a physician from using its products outside of such cleared or approved indications for use, known as off-label uses, when in the physician’s independent professional medical judgment, he or she deems it appropriate, and Bioventus does not analyze the ordering practices of physicians with respect to off-label uses. In cases where prescriptions of Bioventus’ Exogen system are written for off-label uses, Bioventus could be subject to regulatory or enforcement actions if it was determined to have engaged in promotion of Bioventus’ products for off-label uses, or otherwise determined to have made false or misleading statements about its products. There may be increased risk of injury to patients if physicians attempt to use Bioventus’ products off-label. Furthermore, the use of Bioventus’ products for indications other than those cleared or approved by the FDA or any foreign regulatory body may not effectively treat such conditions, which could harm Bioventus’ reputation in the marketplace among physicians and patients.

In addition, physicians may misuse Bioventus’ products or use improper techniques if they are not adequately trained, potentially leading to injury and an increased risk of product liability. If Bioventus’ products are misused or used with improper technique, Bioventus may become subject to costly litigation by its customers or their patients. Product liability claims could divert management’s attention from Bioventus’ core business, be expensive to defend and result in sizeable damage awards against Bioventus that may not be covered by insurance.

Further, Bioventus’ promotional materials and training methods must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of off-label use. If the FDA or any foreign regulatory body determines that Bioventus’ promotional materials or training constitute promotion of an off-label use, the FDA could request that Bioventus modify Bioventus’ training, promotional materials or subject Bioventus to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action if they consider Bioventus’ business activities to constitute promotion of an off-label use, which could result in significant penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. Such enforcement actions may include, but are not limited to, criminal, civil and administrative penalties, treble damages, fines, disgorgement, exclusion from participation in government healthcare programs, additional reporting requirements and oversight if Bioventus becomes subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws and the curtailment or restructuring of Bioventus’ operations.

Bioventus’ products may cause or contribute to adverse medical events that Bioventus is required to report to the FDA, and if Bioventus fails to do so, it would be subject to sanctions that could materially harm its business.

Some of Bioventus’ marketed products are subject to MDR obligations, which require that Bioventus report to the FDA any incident in which its products may have caused or contributed to a death or serious injury, or in which Bioventus’ products malfunctioned and, if the malfunction were to recur, it could likely cause or contribute to a death or serious injury. The timing of Bioventus’ obligation to report under the MDR regulations is triggered by the date Bioventus becomes aware of the adverse event as well as the nature of the event.

 

87


Table of Contents

Bioventus may fail to report adverse events of which it becomes aware within the prescribed timeframe. Bioventus may also fail to recognize that it has become aware of a reportable adverse event, especially if it is not reported to Bioventus as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of Bioventus’ products. If Bioventus fails to comply with Bioventus’ reporting obligations, the FDA could take action including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of Bioventus’ device clearances, seizure of Bioventus’ products, or delay in clearance of future products.

Bioventus and Bioventus’ third-party manufacturers and suppliers are subject to various governmental regulations related to the manufacturing of Bioventus’ products.

Bioventus’ products and the manufacturing processes, reporting requirements, post-approval clinical data and promotional activities for such products, will be subject to continued regulatory review, oversight and periodic inspection by the FDA and other domestic and foreign regulatory bodies. In particular, the methods used in, and the facilities used for, the manufacture of the products that Bioventus owns and distributes that are regulated as medical devices must comply with the FDA’s QSR, which covers the procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of medical devices. The FDA enforces the QSR through periodic announced or unannounced inspections of manufacturing facilities, and both Bioventus and Bioventus’ third-party manufacturers and suppliers are subject to such inspections. Similarly, the devices Bioventus distributes on behalf of third-party manufacturers that are regulated as Section 361 HCT/Ps must be manufactured in compliance with cGTP requirements and other related requirements. Moreover, should any of Bioventus’ HA products be re-classified as drugs, such products would be required to comply with a different set of manufacturing requirements under FDA’s cGMP requirements for drugs. Similarly, if Bioventus is successful in obtaining BLA approval for MOTYS, that product will need to comply with the cGMP requirements for biologics, instead of the cGTP requirements that will apply to the product upon Bioventus’ planned launch of the product as a Section 361 HCT/P. The need to comply with different manufacturing requirements may require Bioventus to seek new suppliers.

Failure to comply with applicable FDA requirements, or later discovery of previously unknown problems with Bioventus’ products or the manufacturing processes of Bioventus’ third-party manufacturers and suppliers, including any failure to take satisfactory corrective action in response to an adverse regulatory inspection, can result in, among other things:

 

   

administrative or judicially imposed sanctions;

 

   

injunctions or the imposition of civil penalties or fines;

 

   

recall or seizure of Bioventus’ products;

 

   

total or partial suspension of production or distribution;

 

   

refusal to grant pending or future clearances or approvals for Bioventus’ products;

 

   

withdrawal or suspension of regulatory clearances or approvals;

 

   

clinical holds;

 

   

untitled letters or warning letters;

 

   

refusal to permit the import or export of Bioventus’ products; and

 

   

criminal prosecution of Bioventus or Bioventus’ employees.

Any of these actions could prevent or delay Bioventus from marketing, distributing or selling Bioventus’ products and would likely harm its business. Furthermore, Bioventus’ suppliers may not currently be or may not continue to be in compliance with all applicable regulatory requirements, which could result in Bioventus’ failure to produce its products on a timely basis and in the required quantities, if at all.

 

88


Table of Contents

Bioventus’ products may be subject to product recalls. A recall of Bioventus’ products, either voluntarily or at the direction of the FDA or another governmental authority, or the discovery of serious safety issues with its products, could adversely affect Bioventus.

The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in their design or manufacture. The FDA’s authority to require a recall for medical devices must be based on a finding that there is reasonable probability that the device would cause serious injury or death. Bioventus may also decide to voluntarily recall Bioventus’ products if certain deficiencies are found. Bioventus has in the past instituted a voluntary recall for certain of Bioventus’ products, and Bioventus is currently undertaking a voluntary Class II recall of certain vials of ultrasound gel that Bioventus provide with Bioventus’ Exogen system due to particulates, which were microbial in nature, found in the gel. The gel is manufactured by a third-party supplier, and Bioventus has discontinued the use of that suppliers’ gel and has replaced that gel with that of another manufacturer. Bioventus has identified the affected lots and has notified patients to discard gel bottles from those lots. A government-mandated or voluntary recall could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of Bioventus’ products would divert managerial and financial resources and could adversely affect Bioventus’ reputation and business, which could impair Bioventus’ ability to produce Bioventus’ products in a cost-effective and timely manner in order to meet Bioventus’ customers’ demands. Bioventus may also be subject to liability claims, be required to bear other costs, or take other actions that could adversely affect its business, results of operations and financial condition.

Companies are required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA. Bioventus may initiate voluntary recalls or corrections for Bioventus’ products in the future that Bioventus determines do not require notification of the FDA. If the FDA disagrees with Bioventus’ determinations, they could require Bioventus to report those actions as recalls and Bioventus may be subject to enforcement action.

As Bioventus conducts clinical studies designed to generate long-term data on some of Bioventus’ existing products, the data Bioventus generates may not be consistent with its existing data and may demonstrate less favorable safety or efficacy. Data Bioventus generates may ultimately not be favorable, or could even hurt the commercial prospects for its products.

Bioventus is currently collecting and plans to continue collecting long-term clinical data regarding the quality, safety and effectiveness of some of Bioventus’ existing products. The clinical data collected and generated as part of these studies will further strengthen Bioventus’ clinical evaluation concerning safety and performance of these products. Bioventus believes that this additional data will help with the marketing of its products by providing surgeons and physicians with additional confidence in their long-term safety and efficacy. If the results of these clinical studies are negative, these results could reduce demand for Bioventus’ products and significantly reduce its ability to achieve expected net sales. Bioventus does not expect to undertake such studies for all of its products and will only do so in the future where Bioventus anticipates the benefits will outweigh the costs and risks. For these reasons, surgeons and physicians could be less likely to purchase Bioventus’ products than competing products for which longer-term clinical data are available. Also, Bioventus may not choose or be able to generate the comparative data that some of its competitors have or are generating and it may be subject to greater regulatory and product liability risks. If Bioventus is unable to or unwilling to collect sufficient long-term clinical data supporting the quality, safety and effectiveness of Bioventus’ existing products, its business, results of operations and financial condition could be adversely affected.

Bioventus may rely on third parties to conduct Bioventus’ clinical studies and to assist it with preclinical development and if they fail to perform as contractually required or expected, Bioventus may not be able to obtain regulatory clearance or approval to commercialize its products.

Bioventus has relied upon and may continue to rely upon third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories to assist in conducting Bioventus’ clinical

 

89


Table of Contents

studies, which must be conducted in accordance with applicable regulations, including GCP and its preclinical development activities. Bioventus relies on these parties for execution of its studies, and control only certain aspects of their activities. Nevertheless, Bioventus is responsible for ensuring that each of its clinical studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards, and Bioventus’ reliance on these third parties does not relieve Bioventus of its regulatory responsibilities. GCPs are regulations and guidelines enforced by the FDA and other regulatory authorities for products in clinical development. Regulatory authorities enforce these GCPs through periodic inspections of trial sponsors, principal investigators, trial sites, and CROs. Bioventus cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of Bioventus’ clinical trials comply with GCP regulations. In addition, Bioventus’ clinical trials must be conducted with product produced under applicable manufacturing requirements.

If these third parties fail to successfully carry out their contractual duties, comply with applicable regulatory obligations, including GCP requirements, or meet expected deadlines, or if these third parties must be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to clinical protocols or applicable regulatory requirements or for other reasons, Bioventus’ pre-clinical development activities or clinical studies may be extended, delayed, suspended or terminated. Under these circumstances Bioventus may not be able to obtain regulatory clearance or approval for, or successfully commercialize, Bioventus’ products on a timely basis, if at all, and its business, results of operations and financial condition may be adversely affected.

If any of its relationships with these third parties terminate, Bioventus may not be able to enter into arrangements with alternative third parties or to do so on commercially reasonable terms. In addition, Bioventus’ third parties are not its employees, and except for remedies available to Bioventus under its agreements with them, Bioventus cannot control whether or not they devote sufficient time and resources to its on-going clinical, nonclinical and preclinical programs. Switching or adding additional third parties involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new contract research organization (CRO) or other third party vendor commences work. As a result, delays occur, which can materially impact Bioventus’ ability to meet its desired development timelines. Though Bioventus carefully manages its relationships with Bioventus’ third party vendors including CROs, there can be no assurance that Bioventus will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on Bioventus’ business, financial condition and prospects.

Healthcare regulatory reform may affect Bioventus’ ability to sell its products profitably and could adversely affect its business, results of operations and financial condition.

In the United States and in certain foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the regulatory and healthcare systems in ways that could prevent or delay marketing approval of Bioventus’ products in development, restrict or regulate post-approval activities of its products and impact its ability to sell its products profitably. In the United States in recent years, new legislation has been proposed and adopted at the federal and state level that is effecting major changes in the healthcare system. In addition, new regulations and interpretations of existing healthcare statutes and regulations are frequently adopted.

In March 2010, the Affordable Care Act was signed into law. While the goal of healthcare reform is to expand coverage to more individuals, it also involves increased government price controls, additional regulatory mandates and other measures designed to constrain medical costs. The Affordable Care Act substantially changes the way healthcare is financed by both governmental and private insurers, encourages improvements in the quality of healthcare items and services and significantly impacts the medical device industry. Among other things, the Affordable Care Act:

 

   

increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;

 

90


Table of Contents
   

created a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;

 

   

extended manufacturers’ Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations;

 

   

expanded eligibility criteria for Medicaid programs;

 

   

established a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical effectiveness research in an effort to coordinate and develop such research; and

 

   

implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the Affordable Care Act, as well as efforts by the former Trump administration to repeal or replace certain aspects of the ACA, and Bioventus expects such challenges and amendments to continue. For example, the Tax Cuts and Jobs Act of 2017 includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On December 14, 2018, a U.S. District Court Judge in the Northern District of Texas, ruled that the individual mandate is a critical and inseverable feature of the Affordable Care Act, and therefore, because it was repealed as part of the U.S. Tax Act, the remaining provisions of the Affordable Care Act are invalid as well. On December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the Affordable Care Act are invalid as well. On March 2, 2020, the United States Supreme Court granted the petitions for writs of certiorari to review this case, and the Court held oral argument on November 10, 2020. The case is expected to be decided in mid-2021. It is unclear how this decision and other efforts to challenge, repeal or replace the Affordable Care Act will impact the Affordable Care Act or Bioventus’ business. Bioventus expects there will be additional challenges and amendments to the Affordable Care Act in the future.

The results of the 2020 U.S. presidential and congressional elections have created regulatory uncertainty, including with respect to the U.S. government’s role, in the U.S. healthcare industry. As a result of such elections, there are renewed and reinvigorated calls for health insurance reform, which could cause significant uncertainty in the U.S. healthcare market, could increase Bioventus’ costs, decrease its revenues or inhibit its ability to sell its products. Bioventus cannot predict with certainty what impact any U.S. federal and state health reforms will have on Bioventus, but such changes could impose new and/or more stringent regulatory requirements on Bioventus’ activities or result in reduced reimbursement for its products, any of which could adversely affect its business, results of operations and financial condition.

In addition, third-party payers regularly update payments to physicians and hospitals where Bioventus’ products are used. For example, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) ended the use of the Sustainable Growth Rate Formula, and provided for a 0.5% annual increase in payment rates under the Medicare Physician Fee Schedule through 2019, but no annual update from 2020 through 2025. MACRA also introduced a merit based incentive bonus program for Medicare physicians beginning in 2019. At this time, it is unclear how the introduction of the merit based incentive program will impact overall physician reimbursement under the Medicare program. In addition, the Budget Control Act of 2011 imposed reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013. Subsequent legislative amendments related to the COVID-19 pandemic suspended this Medicare sequestration payment reduction from May 1, 2020 through March 31, 2021, but extended sequestration through 2030. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several types of providers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These and other payment updates

 

91


Table of Contents

could directly impact the demand for Bioventus’ products or any products Bioventus may develop in the future, if cleared or approved.

Bioventus expects that the Affordable Care Act, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and in additional downward pressure on the price that Bioventus receives for any cleared or approved products. Furthermore, Bioventus believes that many individuals who have obtained insurance coverage through the health insurance exchanges which arose as a result of the Affordable Care Act have done so with policies that have significantly higher deductibles than policies they may have obtained prior to its enactment. Because the out-of-pocket costs of undergoing certain procedures for patients who have not met their deductible for a given year would be significantly higher than they historically would have been, these patients may be discouraged from undergoing certain procedures due to the cost. Any reluctance on the part of patients to undergo procedures utilizing Bioventus’ products due to cost could impact its ability to expand sales of its products and could adversely impact its business, results of operations and financial condition.

Bioventus is subject to federal, state and foreign laws and regulations relating to Bioventus’ healthcare business, and could face substantial penalties if Bioventus is determined not to have fully complied with such laws, which would adversely affect its business, results of operations and financial condition.

Both in Bioventus’ capacity as a pharmaceutical and medical device manufacturer and/or as a supplier of covered items and services to federal health care program beneficiaries, with respect to which items and services Bioventus submits claims for reimbursement from such programs, Bioventus is subject to healthcare fraud and abuse regulation and enforcement by federal, state and foreign governments, which could adversely impact its business, results of operations and financial condition. Healthcare fraud and abuse and health information privacy and security laws potentially applicable to Bioventus’ operations include:

 

   

the federal Anti-Kickback Statute, which applies to Bioventus’ marketing practices, educational programs, pricing and discounting policies and relationships with healthcare providers, by prohibiting, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or providing remuneration intended to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare or Medicaid programs. A person or entity does not need to have actual knowledge of this statute or specific intent to violate it to have committed a violation. Violations are also subject to civil monetary penalties up to $100,000 for each violation, plus up to three times the remuneration involved. Civil penalties for such conduct can further be assessed under the federal False Claims Act. Violations of the federal Anti-Kickback Statute may also result civil and criminal penalties, including criminal fines of up to $100,000 and imprisonment of up to ten years, or exclusion from Medicare, Medicaid or other governmental programs;

 

   

the “Stark Law,” which prohibits a physician from referring Medicare or Medicaid patients to an entity providing “designated health services,” which includes durable medical equipment, if the physician or immediate family member of the physician, has an ownership or investment interest in or compensation arrangement with such entity that does not comply with the requirements of a Stark exception;

 

   

the federal civil and criminal false claims laws, including the False Claims Act, which impose civil and criminal penalties through governmental, civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the federal government. Suits filed under the False Claims Act, can be brought by any individual on behalf of the government, known as ‘‘qui tam’’ actions, and such individuals, commonly

 

92


Table of Contents
 

known as ‘‘whistleblowers,’’ may share in any amounts paid by the entity to the government in fines or settlement. The frequency of filing qui tam actions has increased significantly in recent years, causing greater numbers of pharmaceutical, medical device and other healthcare companies to have to defend a False Claims Act action. When an entity is determined to have violated the False Claims Act, the government may impose civil fines and penalties ranging from $11,665 to $23,331 for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs. The government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the false claims statutes;

 

   

the federal civil monetary penalties laws, which impose civil fines for, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies;

 

   

HIPAA and its implementing regulations, which created federal criminal laws that prohibit, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;

 

   

HIPAA, as amended by HITECH, and its implementing regulations, which also imposes certain regulatory and contractual requirements regarding the privacy, security and transmission of protected health information, or PHI;

 

   

the federal Physician Payments Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the government information related to certain payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and, beginning in 2022, physician assistants, nurse practitioners, and other practitioners, and requires applicable manufacturers to report annually to the government ownership and investment interests held by the providers described above and their immediate family members and payments or other “transfers of value” to such provider owners. Failure to submit required information may result in civil monetary penalties of $11,766 per failure up to an aggregate of $176,495 per year (or up to an aggregate of $1.177 million per year for “knowing failures”), for all payments, transfers of value or ownership or investment interests that are not timely, accurately, and completely reported in an annual submission, and may result in liability under other federal laws or regulations;

 

   

federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;

 

   

federal government price reporting laws, which require Bioventus to calculate and report complex pricing metrics in an accurate and timely manner to government programs, and where the failure to report such prices may expose Bioventus to potential liability; and

 

   

state and foreign law equivalents of each of the above federal laws and regulations, such as anti-kickback, self-referral, fee-splitting and false claims laws that may apply to items or services reimbursed by any third-party payer, including commercial insurers; state laws that require pharmaceutical and device companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise that restrict payments that may be made to healthcare providers; state laws that require drug and device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information; and state and foreign

 

93


Table of Contents
 

laws governing the privacy and security of certain health information, such as GDPR, which imposes obligations and restrictions on the collection and use of personal data relating to individuals located in the EU (including health data), many of which differ from each other in significant ways and some of which may be more stringent than HIPAA or HITECH.

The risk of Bioventus being found in violation of these laws and regulations is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Bioventus is unable to predict what additional federal, state or foreign legislation or regulatory initiatives may be enacted in the future regarding Bioventus’ business or the healthcare industry in general, or what effect such legislation or regulations may have on Bioventus. Federal, state or foreign governments may impose additional restrictions or adopt interpretations of existing laws that could adversely affect Bioventus.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is possible that some of Bioventus’ business activities, including certain sales and marketing practices and financial arrangements with physicians and other healthcare providers, some of whom recommend, use, prescribe or purchase Bioventus’ products, and other customers, could be subject to challenge under one or more of such laws. Any action against Bioventus for violation of these laws, even if Bioventus successfully defends against it, could cause Bioventus to incur significant legal expenses and divert its management’s attention from the operation of its business. If Bioventus’ operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to Bioventus, Bioventus may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from governmental healthcare programs, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of Bioventus’ operations, any of which could adversely impact its business, results of operations and financial condition.

Bioventus is subject to governmental regulation and other legal obligations, particularly related to privacy, data protection and information security, and Bioventus is subject to consumer protection laws that regulate its marketing practices and prohibit unfair or deceptive acts or practices. Bioventus’ actual or perceived failure to comply with such obligations could harm its business.

Bioventus is subject to diverse laws and regulations relating to data privacy and security, including, in the United States, HIPAA and, in the EU, EEA, Regulation 2016/679, known as the GDPR. New privacy rules are being enacted in the United States and globally, and existing ones are being updated and strengthened. Complying with these numerous, complex and often changing regulations is expensive and difficult, and failure to comply with any privacy laws or data security laws or any security incident or breach involving the misappropriation, loss or other unauthorized use or disclosure of sensitive or confidential patient or consumer information, whether by Bioventus, one of Bioventus’ business associates or another third-party, could adversely affect its business, results of operations and financial condition, including but not limited to: investigation costs, material fines and penalties; compensatory, special, punitive, and statutory damages; litigation; reputational damage; consent orders regarding Bioventus’ privacy and security practices; requirements that Bioventus provide notices, credit monitoring services and/or credit restoration services or other relevant services to impacted individuals; adverse actions against Bioventus’ licenses to do business; and injunctive relief. Furthermore, these rules are constantly changing. For example, the CCPA took effect on January 1, 2020. The CCPA establishes a new privacy framework for covered businesses and provides new and enhanced data privacy rights to California residents, such as affording consumers the right to access and delete their information and to opt out of certain sharing and sales of personal information. The CCPA imposes severe statutory damages as well as a private right of action for certain data breaches that result in the loss of personal information. This private right of action is expected to increase the likelihood of, and risks associated with, data breach litigation. It remains unclear how various provisions of the CCPA will be interpreted and enforced. The CCPA contains an exemption for medical information governed by the CMIA and for PHI collected by a covered entity or business associate governed by the privacy, security and breach notification rules established pursuant to HIPAA, but the precise application and

 

94


Table of Contents

scope of this exemption is not yet clear, and the law may still apply to certain aspects of Bioventus’ business. The CCPA may lead other states to pass comparable legislation, with potentially greater penalties, and more rigorous compliance requirements relevant to Bioventus’ business, and that may not include exemptions for businesses subject to HIPAA. The effects of the CCPA, and other similar state or federal laws, are potentially significant and may require Bioventus to modify its data processing practices and policies and to incur substantial costs and potential liability in an effort to comply with such legislation.

The privacy laws in the EU have been significantly reformed. On May 25, 2018, the GDPR entered into force and became directly applicable in all EU member states. The GDPR implements more stringent operational requirements than its predecessor legislation. For example, the GDPR requires Bioventus to make more detailed disclosures to data subjects, requires disclosure of the legal basis on which Bioventus can process personal data, makes it harder for Bioventus to obtain valid consent for processing, requires the appointment of data protection officers when sensitive personal data, such as health data, is processed on a large scale, provides more robust rights for data subjects, introduces mandatory data breach notification through the EU, imposes additional obligations on Bioventus when contracting with service providers and requires Bioventus to adopt appropriate privacy governance including policies, procedures, training and data audit. If Bioventus does not comply with its obligations under the GDPR, Bioventus could be exposed to fines of up to the greater of €20 million or up to 4% of its total global annual revenue in the event of a significant breach. In addition, Bioventus may be the subject of litigation and/or adverse publicity, which could adversely affect its business, results of operations and financial condition.

Prior to the effectiveness of the GDPR, the US-EU Safe Harbor framework provided a method which permitted the transfer of personal data to the United States under European privacy law; in 2015 it was declared invalid and replaced with the US-EU Privacy Shield framework, or Privacy Shield. On July 16, 2020, the Court of Justice of the European Union, or CJEU, invalidated Privacy Shield. While the CJEU upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances; this has created increasing uncertainty. This recent development will require Bioventus to review and amend the legal mechanisms by which Bioventus makes and/or receive personal data transfers to/in the U.S. As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses cannot be used, and/or start taking enforcement action, Bioventus could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if Bioventus is otherwise unable to transfer personal data between and among countries and regions in which Bioventus operates, it could affect the manner in which Bioventus provides its services, the geographical location or segregation of Bioventus’ relevant systems and operations, and could adversely affect Bioventus’ financial results.

Additionally starting on January 1, 2021 (following the United Kingdom’s departure from the EU), Bioventus will have to comply with the GDPR and the UK GDPR (i.e. the GDPR as implemented into UK law) if Bioventus offers services to UK users, monitor their behavior or are established in the United Kingdom. Failure to comply with the UK GDPR can result in fines up to the greater of £17 million (approximately $20 million), or 4% of global revenue. However, the relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear. For example, it is unclear what the role of the Information Commissioner’s Office will be following the end of the transitional period. In addition, it is likely that documentation will need to be put in place between UK entities and entities in European member states to ensure adequate safeguards are in place for data transfers, which may result in increased costs with respect to transfers of personal data between the European Union and the UK, which would increase Bioventus’ expenses. Bioventus may find it necessary or advantageous to join industry bodies or self-regulatory organizations that impose stricter compliance requirements than those set out in applicable laws, including the GDPR. Bioventus may also be bound by contractual restrictions that prevent Bioventus from participating in data processing activities that would otherwise be permissible under applicable laws, including the GDPR. Such strategic choices may impact Bioventus’ ability to use and exploit data, and may have an adverse impact on Bioventus’ business.

 

95


Table of Contents

Failure to comply with the FCPA and laws associated with Bioventus’ activities outside the United States could adversely affect its business, results of operations and financial condition.

Bioventus is subject to the FCPA and other anti-bribery legislation around the world. The FCPA generally prohibits covered entities and their intermediaries from engaging in bribery or making other prohibited payments, offers or promises to foreign officials for the purpose of obtaining or retaining business or other advantages. In addition, the FCPA imposes recordkeeping and internal controls requirements on publicly traded corporations and their foreign affiliates, which are intended to, among other things, prevent the diversion of corporate funds to the payment of bribes and other improper payments, and to prevent the establishment of “off books” slush funds from which such improper payments can be made. As Bioventus conducts its business in jurisdictions outside of the United States, Bioventus faces significant risks if it fails to comply with the FCPA and other laws that prohibit improper payments, offers or promises of payment to foreign governments and their officials and political parties by Bioventus and other business entities for the purpose of obtaining or retaining business or other advantages. In many foreign countries, particularly in countries with developing economies, it may be a local custom that businesses operating in such countries engage in business practices that are prohibited by the FCPA or other laws and regulations. Although Bioventus has implemented a company policy requiring its employees and consultants to comply with the FCPA and similar laws, such policy may not be effective at preventing all potential FCPA or other violations. Although Bioventus’ agreements with its international distributors clearly state Bioventus’ expectations for its distributors’ compliance with U.S. laws, including the FCPA, and provide Bioventus with various remedies upon any non-compliance, including the ability to terminate the agreement, Bioventus also cannot guarantee its distributors’ compliance with U.S. laws, including the FCPA. Therefore, there can be no assurance that Bioventus’ employees and agents, or those companies to which Bioventus outsources certain of its business operations, have not and will not take actions that violate its policies or applicable laws, for which Bioventus may be ultimately held responsible. Any violation of the FCPA and related policies could result in severe criminal or civil sanctions, which could adversely affect its business, results of operations and financial condition.

Furthermore, Bioventus is subject to the export controls and economic embargo rules and regulations of the United States, including, but not limited to, the Export Administration Regulations and trade sanctions against embargoed countries, which are administered by the Office of Foreign Assets Control within the Department of the Treasury, as well as the laws and regulations administered by the Department of Commerce. These regulations limit Bioventus’ ability to market, sell, distribute or otherwise transfer its products or technology to prohibited countries or persons. A determination that Bioventus has failed to comply, whether knowingly or inadvertently, may result in substantial penalties, including fines, enforcement actions, civil and/or criminal sanctions, the disgorgement of profits, the imposition of a court-appointed monitor, as well as the denial of export privileges, and may adversely affect its business, results of operations and financial condition.

If Bioventus fails to meet Medicare accreditation and surety bond requirements or DMEPOS supplier standards, it could adversely affect its business, results of operations and financial condition.

Bioventus’ Exogen system is classified by CMS and third-party payers as durable medical equipment. Suppliers of Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) must be accredited by an approved accreditation organization as meeting DMEPOS quality standards adopted by CMS and are required to meet surety bond requirements. In addition, Medicare DMEPOS suppliers must comply with Medicare supplier standards in order to obtain and retain billing privileges, including meeting all applicable federal and state licensure and regulatory requirements. CMS periodically expands or otherwise clarifies the Medicare DMEPOS supplier standards, and states periodically change licensure requirements, including licensure rules imposing more stringent requirements on out-of-state DMEPOS suppliers. Bioventus believes it is currently in compliance with these requirements. If Bioventus fails to maintain Bioventus’ Medicare accreditation status and/or do not comply with Medicare surety bond or supplier standard requirements or state licensure requirements in the future, or if these requirements are changed or expanded, it could adversely affect its business, results of operations and financial condition.

 

96


Table of Contents

Bioventus’ operations involve the use of hazardous and toxic materials, and Bioventus must comply with environmental, health and safety laws and regulations, which can be expensive, and could adversely affect its business, results of operations and financial condition.

Bioventus is subject to a variety of federal, state, local and foreign laws and regulations relating to the protection of the environment or of human health and safety, including laws pertaining to the use, handling, storage, disposal and human exposure to hazardous and toxic materials. Liability under environmental laws can be imposed on a joint and several basis (which could result in an entity paying more than its fair share) and without regard to comparative fault, and environmental laws are likely to become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violations, which could adversely affect its business, results of operations and financial condition.

Bioventus’ employees, independent distributors, independent contractors, suppliers and other third parties may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could expose Bioventus to liability and hurt its reputation.

Bioventus is exposed to the risk that Bioventus’ employees, independent distributors, independent contractors, suppliers and others may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to Bioventus that violates: (1) FDA laws and regulations, including those laws that require the reporting of true, complete and accurate information to the FDA, (2) manufacturing standards, (3) healthcare fraud and abuse laws, or (4) laws that require the true, complete and accurate reporting of financial information or data. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, creating fraudulent data in Bioventus’ preclinical studies or clinical trials or illegal misappropriation of product, which could result in regulatory sanctions and cause serious harm to Bioventus’ reputation. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions Bioventus takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting it from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Additionally, Bioventus is subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred.

If any such actions are instituted against Bioventus, and Bioventus is not successful in defending Bioventus or asserting its rights, those actions could have a significant impact on Bioventus’ business and financial results, including, without limitation, the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, reputational harm, diminished profits and future earnings, and curtailment of Bioventus’ operations, any of which could adversely affect its business, results of operations and financial condition.

Risks Relating to Intellectual Property Matters

The risk factors listed below describe the risks Bioventus faces related to intellectual property matters. The companies who own certain of the products Bioventus distributes face similar risks with respect to intellectual property relating to such products. If such suppliers are unable to protect their intellectual property rights, they may not be able to continue to supply Bioventus with products, which could adversely affect its business, results of operations and financial condition.

Protection of Bioventus’ intellectual property rights may be difficult and costly, and Bioventus’ inability to protect its intellectual property could adversely affect its competitive position.

Bioventus’ success depends on its ability to protect its proprietary rights to the technologies and inventions used in, or embodied by, Bioventus’ products. To protect Bioventus’ proprietary technology, Bioventus relies on patent protection, as well as a combination of copyright, trade secret and trademark laws, as well as nondisclosure, confidentiality and other contractual restrictions in Bioventus’ consulting and employment

 

97


Table of Contents

agreements. These legal means afford only limited protection, however, and may not adequately protect Bioventus’ rights or permit Bioventus to gain or keep any competitive advantage. Bioventus’ existing confidentiality and/or invention assignment agreements with employees, contractors, and others who participate in IP development activities could be breached, or Bioventus may not enter into sufficient and adequate agreements with those individuals in the first instance, and it may not have adequate remedies for such breaches. Furthermore, Bioventus may be subject to, and forced to defend against, third-party claims of ownership to its intellectual property. If Bioventus fails in defending any such claims, in addition to paying monetary damages, it may lose valuable intellectual property rights, such as exclusive ownership of, or rights to use, valuable intellectual property. Such an outcome could adversely affect its business, results of operations and financial condition. Even if Bioventus is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Patents

The process of applying for patent protection is time-consuming and expensive and Bioventus cannot assure you that all of Bioventus’ patent applications will issue as patents or that, if issued, they will issue in a form that will be advantageous to Bioventus. The rights granted to Bioventus under its patents, including prospective rights sought in Bioventus’ pending patent applications, may not be meaningful or provide Bioventus with any commercial advantage, and they could be opposed, contested, narrowed, or circumvented by Bioventus’ competitors or declared invalid or unenforceable in judicial or administrative proceedings. Bioventus may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that Bioventus will fail to identify patentable aspects of its research and development output before it is too late to obtain patent protection. As a result, some of Bioventus’ products are not, and in the future may not be, protected by patents. Bioventus generally applies for patents in those countries where it intends to make, has made, use, offer for sale, or sell products and where it assesses the risk of infringement to justify the cost of seeking patent protection. However, Bioventus does not seek protection in all countries where it sells products and Bioventus may not accurately predict all the countries where patent protection would ultimately be desirable. If Bioventus fails to timely file a patent application in any such country or major market, it may be precluded from doing so at a later date. Competitors may use Bioventus’ technologies in jurisdictions where Bioventus has not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories in which Bioventus has patent protection but where such protection may not be sufficient to terminate infringing activities. Furthermore, Bioventus may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the rights to patents licensed to Bioventus by third-parties. Therefore, these patents and applications may not be prosecuted or enforced in a manner consistent with the best interests of Bioventus’ business. If such licensors fail to maintain such patents, or lose rights to those patents, the rights Bioventus has licensed may be reduced or eliminated, which could also adversely affect its business, results of operations and financial condition.

Bioventus owns numerous issued patents and pending patent applications relating to its technology and products. The rights granted to Bioventus under these patents, including prospective rights sought in Bioventus’ pending patent applications, could be opposed, contested or circumvented by its competitors or declared invalid or unenforceable in judicial or administrative proceedings. If any of Bioventus’ patents are challenged, invalidated or legally circumvented by third-parties, and if Bioventus does not own other enforceable patents protecting its products, competitors could market products and use processes that are substantially similar to, or superior to, those of Bioventus’, and Bioventus’ business will suffer. In addition, the patents Bioventus owns may not be of sufficient scope or strength to provide it with any meaningful protection or commercial advantage, and competitors may be able to design around Bioventus’ patents or develop products that provide outcomes comparable to those of Bioventus’ without infringing on Bioventus’ intellectual property rights.

Even if Bioventus’ patents are determined by the U.S. Patent and Trademark Office (USPTO) foreign patent office, or a court to be valid and enforceable, they may not be drafted or interpreted sufficiently broadly to prevent others from marketing products and services similar to Bioventus’ or designing around Bioventus’

 

98


Table of Contents

patents. For example, third parties may be able to develop products that are similar to Bioventus’ but that are not covered by the claims of Bioventus’ patents. Third parties may assert that Bioventus or its licensors were not the first to make the inventions covered by Bioventus’ issued patents or pending patent applications. The claims of Bioventus’ issued patents or patent applications when issued may not cover Bioventus’ commercial technology or the future products and services that it develops. Bioventus may not have freedom to operate unimpeded by the patent rights of others. Third parties may have dominating, blocking or other patents relevant to Bioventus’ technology of which Bioventus is not aware. In addition, because patent applications in the United States and many foreign jurisdictions are typically not published until 18 months after the filing of certain priority documents (or, in some cases, are not published until they issue as patents) and because publications in the scientific literature often lag behind actual discoveries, Bioventus cannot be certain that others have not filed patent applications for Bioventus’ technology or its contemplated technology. Any such patent applications may have priority over Bioventus’ patent applications or issued patents, which could require Bioventus to obtain rights from third parties to issued patents or pending patent applications covering such technologies to allow it to commercialize its technology. If another party has filed a U.S. patent application on inventions similar to Bioventus’, depending on when the timing of the filing date falls under certain patent laws, Bioventus may have to participate in a priority contest (such as an interference proceeding) declared by the USPTO to determine priority of invention in the United States. There may be prior public disclosures of which Bioventus is not aware that could invalidate its patents or a portion of the claims of its patents. Further, Bioventus may not develop additional proprietary technologies and, even if Bioventus does, they may not be patentable.

In addition, patent reform legislation may pass in the future that could lead to additional uncertainties and increased costs surrounding the prosecution, enforcement, and defense of Bioventus’ patents and applications. Bioventus may be subject to a third-party preissuance submission of prior art to the USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or other patent office proceedings or litigation, in the United States or elsewhere, challenging Bioventus’ patent rights. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, Bioventus’ patent rights, allow third-parties to commercialize Bioventus’ technology or products and compete directly with Bioventus, without payment to Bioventus, or result in its inability to manufacture or commercialize products without infringing third-party patent rights.

Moreover, the USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In addition, periodic maintenance fees on issued patents often must be paid to the USPTO and foreign patent agencies over the lifetime of the patent. While an unintentional lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If Bioventus fails to maintain the patents and patent applications covering Bioventus’ products or procedures, it may not be able to stop a competitor from marketing products that are the same as or similar to its products, which would adversely affect its business, results of operations and financial condition.

Filing, prosecuting and defending patents on Bioventus’ products in all countries throughout the world would be prohibitively expensive. The requirements for patentability may differ in certain countries, particularly developing countries, and the breadth of patent claims allowed can be inconsistent. In addition, the laws of some foreign countries may not protect Bioventus’ intellectual property rights to the same extent as laws in the United States. Consequently, Bioventus may not be able to prevent third parties from practicing its inventions in all countries outside the United States. Competitors may use Bioventus’ technologies in jurisdictions where Bioventus has not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories in which Bioventus has patent protection that may not be sufficient to terminate infringing activities.

 

99


Table of Contents

Due to differences between foreign and U.S. patent laws, Bioventus’ patented intellectual property rights may not receive the same degree of protection in every jurisdiction in which Bioventus obtains patents. Furthermore, Bioventus does not have patent rights in certain foreign countries in which a market may exist in the future. Bioventus may need to expend additional resources to protect or defend its intellectual property rights in these countries, and the inability to protect or defend the same could impair Bioventus’ brand or adversely affect the growth of Bioventus’ business internationally. For example, Bioventus may not be able to stop a competitor from marketing and selling in foreign countries products that are the same as or similar to Bioventus’ products.

Patents have a limited lifespan, and the protection patents affords is limited. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Even if patents covering Bioventus’ products are obtained, once the patent life has expired for patents covering a product, Bioventus may be open to competition from competitive products and services. As a result, Bioventus’ patent portfolio may not provide it with sufficient rights to exclude others from commercializing product candidates similar or identical to Bioventus’.

Trademarks

Bioventus relies on its trademarks as one means to distinguish Bioventus’ products from the products of its competitors, and have registered or applied to register many of these trademarks. However, Bioventus may not be able to successfully secure trademark registrations for all such applications. Third-parties may oppose Bioventus’ trademark applications, or otherwise challenge Bioventus’ use of both registered and unregistered trademarks. In the event that Bioventus’ trademarks are successfully challenged, Bioventus could be forced to rebrand its products, which could result in loss of brand recognition and could require Bioventus to devote resources to advertising and marketing new brands. Bioventus’ competitors may infringe Bioventus’ trademarks and Bioventus may not have adequate resources to enforce its trademarks. Over the long term, if Bioventus is unable to establish name recognition based on its trademarks, then Bioventus may not be able to compete effectively and its business, results of operations and financial condition may be adversely affected.

Trade secrets and know-how

Bioventus may not be able to prevent the unauthorized disclosure or use of its technical knowledge or other trade secrets by consultants, vendors, former employees or current employees, despite the existence generally of confidentiality agreements and other contractual restrictions. Monitoring unauthorized uses and disclosures of Bioventus’ intellectual property is difficult, and Bioventus does not know whether the steps it has taken to protect Bioventus’ intellectual property will be effective.

Moreover, Bioventus’ competitors may independently develop equivalent knowledge, methods and know-how. For example, the FDA, as part of its Transparency Initiative, is currently considering whether to make additional information publicly available on a routine basis, including information that Bioventus may consider to be trade secrets or other proprietary information, and it is not clear at the present time how the FDA’s disclosure policies may change in the future, if at all. Bioventus’ competitors could use any of the information Bioventus may be required to disclose by the FDA to develop independently technology similar to those of Bioventus’. Competitors could purchase Bioventus’ products and attempt to replicate some or all of the competitive advantages Bioventus derives from Bioventus’ development efforts, willfully infringe Bioventus’ intellectual property rights, design around Bioventus’ protected technology or develop their own competitive technologies that fall outside of Bioventus’ intellectual property rights. If Bioventus’ intellectual property is not adequately protected so as to protect Bioventus’ market against competitors’ products and methods, its competitive position could be adversely affected, as could its business, results of operations and financial condition.

If Bioventus was to enforce a claim that a third-party had illegally obtained, misappropriated or was using Bioventus’ trade secrets, it would be expensive and time consuming, and the outcome would be unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. If any of the technology or

 

100


Table of Contents

information that Bioventus protects as trade secrets were to be independently developed by a competitor, Bioventus would have no right to prevent them from using that technology or information to compete with Bioventus. Misappropriation or unauthorized disclosure of Bioventus’ trade secrets could impair Bioventus’ competitive position and may adversely affect its business, results of operations and financial condition. Additionally, if the steps taken to maintain Bioventus’ trade secrets are deemed inadequate, Bioventus may have insufficient recourse against third parties for misappropriating the trade secret.

Bioventus depends on certain technologies that are licensed to it. Bioventus does not control the intellectual property rights covering these technologies and any loss of Bioventus’ rights to these technologies or the rights licensed to Bioventus could prevent Bioventus from selling Bioventus’ products, which could adversely impact its business, results of operations and financial condition.

Bioventus is a party to license agreements under which Bioventus is granted rights to intellectual property that is important to Bioventus’ business, and Bioventus may need to enter into additional license agreements in the future. Bioventus relies on these licenses in order to be able to use and sell various proprietary technologies that are material to Bioventus’ business, as well as technologies which Bioventus intends to use in its future commercial activities. Bioventus’ rights to use these technologies and the inventions claimed in the licensed patents are subject to the continuation of and Bioventus’ compliance with the terms of those licenses. Bioventus’ existing license agreements impose, and Bioventus expects that future license agreements will impose on Bioventus, various diligence obligations, payment of milestones or royalties and other obligations. If Bioventus fails to comply with Bioventus’ obligations under these agreements, or Bioventus is subject to a bankruptcy, the licensor may have the right to terminate the license, in which case Bioventus would not be able to market products covered by the license, which would adversely affect its business, results of operations and financial condition.

As Bioventus has done previously, Bioventus may need to obtain licenses from third parties to advance Bioventus’ research or allow commercialization of Bioventus’ products and technologies. Bioventus may fail to obtain any of these licenses on commercially reasonable terms, if at all. Even if Bioventus is able to obtain a license, it may be non-exclusive, thereby giving Bioventus’ competitors access to the same technologies licensed to Bioventus. In the event that Bioventus is not able to acquire a license, Bioventus may be required to expend significant time and resources to develop or license replacement technology. If Bioventus is unable to do so, Bioventus may be unable to develop or commercialize the affected products and technologies, which could materially harm Bioventus’ business. In addition, the third parties owning such intellectual property rights could seek either an injunction prohibiting Bioventus’ sales, or, with respect to Bioventus’ sales, an obligation on Bioventus’ part to pay royalties or other forms of compensation and damages.

In some cases, Bioventus may not have the right to control the prosecution, maintenance, or filing of the patents that are licensed to Bioventus, or the enforcement of these patents against infringement by third parties. Some of Bioventus’ patents and patent applications were not filed by Bioventus, but were either acquired by Bioventus or are licensed from third parties. Thus, these patents and patent applications were not drafted by Bioventus or Bioventus’ attorneys, and Bioventus did not control or have any input into the prosecution of these patents and patent applications prior to Bioventus’ acquisition of, or Bioventus’ entry into a license with respect to, such patents and patent applications. Bioventus cannot be certain that the drafting or prosecution of the patents and patent applications licensed to Bioventus will result or has resulted in valid and enforceable patents. Further, Bioventus does not always retain complete control over Bioventus’ ability to enforce Bioventus’ licensed patent rights against third-party infringement. In those cases, Bioventus cannot be certain that Bioventus’ licensor will elect to enforce these patents to the extent that Bioventus would choose to do so, or in a way that will ensure that Bioventus retains the rights Bioventus currently has under Bioventus’ license. If Bioventus’ licensor fails to properly enforce the patents subject to Bioventus’ license in the event of third-party infringement, Bioventus’ ability to retain Bioventus’ competitive advantage with respect to Bioventus’ products may be materially and adversely affected.

 

101


Table of Contents

Licensing of intellectual property is an important part of Bioventus’ business and involves complex legal, business and scientific issues. Disputes may arise between Bioventus and Bioventus’ licensors regarding intellectual property that is subject to a license agreement, including:

 

   

the scope of rights granted under the license agreement and other interpretation-related issues;

 

   

whether and the extent to which Bioventus’ technology and processes infringe on intellectual property of the licensor that is not subject to the license agreement;

 

   

Bioventus’ right to sublicense patent and other rights to third parties under collaborative development relationships;

 

   

Bioventus’ diligence obligations with respect to the use of the licensed technology in relation to Bioventus’ development and commercialization of its products and technologies, and what activities satisfy those diligence obligations; and

 

   

the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by Bioventus’ licensors and Bioventus and Bioventus’ partners.

In addition, Bioventus may become the owner of intellectual property that was obtained through assignments which may be subject to re-assignment back to the original assignor upon Bioventus’ failure to prosecute or maintain such intellectual property, upon Bioventus’ breach of the agreement pursuant to which such intellectual property was assigned, or upon Bioventus’ bankruptcy.

If disputes over intellectual property that Bioventus has licensed prevent or impair Bioventus’ ability to maintain its current licensing arrangements on acceptable terms, or if intellectual property is re-assigned back to the original assignor, Bioventus may be unable to successfully develop and commercialize the affected products and technologies.

Bioventus’ intellectual property agreements with third parties may be subject to disagreements over contract interpretation, which could narrow the scope of Bioventus’ rights to the relevant intellectual property or technology.

Certain provisions in Bioventus’ intellectual property agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could affect the scope of Bioventus’ rights to the relevant intellectual property or technology, or affect financial or other obligations under the relevant agreement, either of which could adversely affect its business, results of operations and financial condition.

In addition, while it is Bioventus’ policy to require its employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to it, Bioventus may be unsuccessful in executing such an agreement with each party who in fact conceives or develops intellectual property that Bioventus regards as its own. Bioventus’ assignment agreements may not be self-executing or may be breached, and Bioventus may be forced to bring claims against third parties, or defend claims they may bring against Bioventus, to determine the ownership of what Bioventus regards as its intellectual property.

Bioventus may in the future be a party to patent and other intellectual property litigation and administrative proceedings that could be costly and could interfere with Bioventus’ ability to successfully market Bioventus’ products.

The medical device industry has been characterized by frequent and extensive intellectual property litigation and is highly competitive. Bioventus’ competitors or other patent holders may assert that Bioventus’ products and/or the methods employed in Bioventus’ products are covered by their patents or that Bioventus is infringing, misappropriating, or misusing their trademark, copyright, trade secret, and/or other proprietary rights.

 

102


Table of Contents

If Bioventus’ products or methods are found to infringe, Bioventus could be prevented from manufacturing or marketing Bioventus’ products. In the event that Bioventus becomes involved in such a dispute, Bioventus may incur significant costs and expenses and may need to devote resources to resolving any claims, which would reduce the cash Bioventus has available for operations and may be distracting to management and other employees, including those involved in the development of intellectual property. Bioventus does not know whether Bioventus’ competitors or potential competitors have applied for, will apply for, or will obtain patents that will prevent, limit or interfere with Bioventus’ ability to make, use, sell, import or export Bioventus’ products. Because patent applications can take many years to issue, third parties may have currently pending patent applications which may later result in issued patents that Bioventus’ products and technologies may infringe, or which such third parties claim are infringed by the use of Bioventus’ products or technologies. There is no guarantee that patents will not issue in the future from currently pending applications that may be infringed by Bioventus’ technology or products. In addition, identification of third-party patent rights that may be relevant to Bioventus’ technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases, and difficulty in assessing the meaning of patent claims. Moreover, as the medical device industry expands and more patents are issued in this area, the risk increases that Bioventus may be subject to claims of infringement of the patent rights of third parties. Bioventus cannot assure you that Bioventus will prevail in such actions, or that other actions alleging misappropriation or misuse by Bioventus of third-party trade secrets or infringement by Bioventus of third-party patents, copyrights, trademarks or other rights or challenging the validity of Bioventus’ patents, copyrights, trademarks or other rights will not be asserted against Bioventus. Competing products may also be sold in other countries in which Bioventus’ patent coverage might not exist or be as strong. If Bioventus loses a foreign patent lawsuit alleging Bioventus’ infringement of a competitor’s patents, Bioventus could be prevented from marketing Bioventus’ products in one or more foreign countries.

Bioventus may also initiate litigation against third-parties to enforce Bioventus’ patent and proprietary rights or to determine the scope, enforceability or validity of the proprietary rights of others. Bioventus’ intellectual property has not been tested in litigation. If Bioventus initiates litigation to protect Bioventus’ rights, Bioventus runs the risk of having Bioventus’ patents and other proprietary rights invalidated, canceled or narrowed, which could undermine Bioventus’ competitive position. Further, if the scope of protection provided by Bioventus’ patents or patent applications or other proprietary rights is threatened or reduced as a result of litigation, it could discourage third parties from entering into collaborations with Bioventus that are important to the commercialization of Bioventus’ products.

Bioventus may be subject to ownership disputes relating to intellectual property, including disputes arising from conflicting obligations of consultants or others who are involved in developing Bioventus’ product. Furthermore, if a license to necessary technology is terminated, the licensor may initiate litigation claiming that Bioventus’ processes or products infringe or misappropriate its patent or other intellectual property rights and/or that Bioventus breached Bioventus’ obligations under the license agreement, and Bioventus and Bioventus’ collaborators would need to defend against such proceedings.

These lawsuits and proceedings, regardless of merit, are time-consuming and expensive to initiate, maintain, defend or settle, and could divert the time and attention of managerial and technical personnel, which could materially adversely affect its business, results of operations and financial condition. Any such claim could also force use to do one or more of the following:

 

   

incur substantial monetary liability for infringement or other violations of intellectual property rights, which Bioventus may have to pay if a court decides that the product, service, or technology at issue infringes or violates the third-party’s rights, and if the court finds that the infringement was willful, Bioventus could be ordered to pay treble damages and the third-party’s attorneys’ fees;

 

   

pay substantial damages to Bioventus’ customers or end users to discontinue use or replace infringing technology with non-infringing technology;

 

103


Table of Contents
   

stop manufacturing, offering for sale, selling, using, importing, exporting or licensing the product or technology incorporating the allegedly infringing technology or stop incorporating the allegedly infringing technology into such product, service, or technology;

 

   

obtain from the owner of the infringed intellectual property right a license, which may require Bioventus to pay substantial upfront fees or royalties to sell or use the relevant technology and which may not be available on commercially reasonable terms, or at all;

 

   

redesign Bioventus’ products, services, and technology so they do not infringe or violate the third-party’s intellectual property rights, which may not be possible or may require substantial monetary expenditures and time;

 

   

enter into cross-licenses with Bioventus’ competitors, which could weaken Bioventus’ overall intellectual property position;

 

   

lose the opportunity to license Bioventus’ technology to others or to collect royalty payments based upon successful protection and assertion of Bioventus’ intellectual property against others;

 

   

find alternative suppliers for non-infringing products and technologies, which could be costly and create significant delay; or

 

   

relinquish rights associated with one or more of Bioventus’ patent claims, if Bioventus’ claims are held invalid or otherwise unenforceable.

Some of Bioventus’ competitors may be able to sustain the costs of complex intellectual property litigation more effectively than Bioventus can because they have substantially greater resources. In addition, intellectual property litigation, regardless of its outcome, may cause negative publicity, adversely impact prospective customers, cause product shipment delays, divert the time, attention and resources of management, or prohibit Bioventus from manufacturing, marketing or otherwise commercializing Bioventus’ products, services and technology. Any uncertainties resulting from the initiation and continuation of any litigation could adversely affect Bioventus’ ability to raise additional funds or otherwise adversely affect its business, results of operations and financial condition.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of Bioventus’ confidential information could be compromised by disclosure during this type of litigation. In addition, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If these results are perceived to be negative, the price of Bioventus class A common stock could be adversely affected.

In addition, certain of Bioventus’ agreements with suppliers, distributors, customers and other entities with whom Bioventus does business may require Bioventus to defend or indemnify these parties to the extent they become involved in infringement claims relating to Bioventus’ technologies or products, or rights licensed to them by Bioventus. Bioventus could also voluntarily agree to defend or indemnify third parties in instances where Bioventus is not obligated to do so if Bioventus determines it would be important to Bioventus’ business relationships. If Bioventus is required or agree to defend or indemnify any of these third parties in connection with any infringement claims, Bioventus could incur significant costs and expenses that could adversely affect Bioventus’ business, results of operation and financial condition.

Bioventus may be subject to damages resulting from claims that Bioventus or Bioventus’ employees have wrongfully used or disclosed alleged trade secrets of Bioventus’ competitors or former employers or are in breach of non-competition or non-solicitation agreements with Bioventus’ competitors or former employers.

Bioventus could in the future be subject to claims that Bioventus or Bioventus’ employees have inadvertently or otherwise used or disclosed alleged trade secrets or other proprietary information of former employers or competitors. In addition, Bioventus may in the future be subject to claims that Bioventus caused an employee to

 

104


Table of Contents

breach the terms of his or her non-competition or non-solicitation agreement. Litigation may be necessary to defend against these claims. Even if Bioventus is successful in defending against these claims, litigation could result in substantial costs and could be a distraction to management. If Bioventus’ defense to those claims fails, in addition to paying monetary damages, a court could prohibit Bioventus from using technologies or features that are essential to Bioventus’ products, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the competitors or former employers. An inability to incorporate technologies or features that are important or essential to Bioventus’ products could adversely affect its business, results of operations and financial condition, and may prevent Bioventus from selling Bioventus’ products. In addition, Bioventus may lose valuable intellectual property rights or personnel. Any litigation or the threat thereof may adversely affect Bioventus’ ability to hire employees or contract with independent sales representatives. A loss of key personnel or their work product could hamper or prevent Bioventus’ ability to commercialize Bioventus’ products, which could adversely affect its business, results of operations and financial condition.

Any product candidates that Bioventus develops as biologics subject to the BLA pathway may be subject to competition sooner than anticipated.

Bioventus expects to submit a BLA to allow for the marketing of MOTYS. See “Risk Factors––Risks Relating to Government Regulation.” Bioventus’ HCT/P products are subject to extensive government regulation and Bioventus’ failure to comply with these requirements could cause its business to suffer. These products could be subject to significant additional regulatory requirements. The Biologics Price Competition and Innovation Act of 2009 (BPCIA) was enacted as part of the Affordable Care Act to establish an abbreviated pathway for the approval of biosimilar and interchangeable biological products. The regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an approved biologic. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the reference product was approved under a BLA. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. While it is uncertain when processes intended to implement BPCIA may be fully adopted by the FDA, any of these processes could have a material adverse effect on the future commercial prospects for Bioventus’ biological products.

Bioventus believes that any of the product candidates Bioventus develops that is approved in the United States as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider the subject product candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of the reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

In addition, the approval of a biologic product biosimilar to one of Bioventus’ products could have a material adverse impact on Bioventus’ business as it may be significantly less costly to bring to market and may be priced significantly lower than Bioventus’ products.

Intellectual property rights do not necessarily address all potential threats to Bioventus’ business.

Once granted, patents may remain open to invalidity challenges including opposition, interference, re-examination, post-grant review, inter partes review, nullification or derivation action in court or before patent offices or similar proceedings for a given period after allowance or grant, during which time third parties can raise objections against such grant. In the course of such proceedings, which may continue for a protracted period of time, the patent owner may be compelled to limit the scope of the allowed or granted claims thus attacked, or may lose the allowed or granted claims altogether.

 

105


Table of Contents

In addition, the degree of future protection afforded by Bioventus’ intellectual property rights is uncertain because even granted intellectual property rights have limitations, and may not adequately protect Bioventus’ business, provide a barrier to entry against Bioventus’ competitors or potential competitors or permit Bioventus to maintain Bioventus’ competitive advantage. Moreover, if a third-party has intellectual property rights that cover the practice of Bioventus’ technology, Bioventus may not be able to fully exercise or extract value from Bioventus’ intellectual property rights. The following examples are illustrative:

 

   

others may be able to develop and/or practice technology that is similar to Bioventus’ technology or aspects of Bioventus’ technology, but that are not covered by the claims of the patents that Bioventus owns or controls, assuming such patents have issued or do issue;

 

   

Bioventus or Bioventus’ licensors or any future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by the issued patent or pending patent application that Bioventus owns or has exclusively licensed;

 

   

Bioventus or Bioventus’ licensors or any future strategic partners might not have been the first to file patent applications covering certain of Bioventus’ inventions;

 

   

others may independently develop similar or alternative technologies or duplicate any of Bioventus’ technologies without infringing Bioventus’ intellectual property rights;

 

   

Bioventus’ pending patent applications may not lead to issued patents;

 

   

issued patents that Bioventus owns or exclusively licenses may not provide Bioventus with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by Bioventus’ competitors;

 

   

Bioventus’ competitors might conduct research and development activities in countries where Bioventus does not have patent rights and then use the information learned from such activities to develop competitive products for sale in Bioventus’ major commercial markets;

 

   

third parties performing manufacturing or testing for Bioventus using Bioventus’ products or technologies could use the intellectual property of others without obtaining a proper license;

 

   

parties may assert an ownership interest in Bioventus’ intellectual property and, if successful, such disputes may preclude Bioventus from exercising exclusive rights over that intellectual property;

 

   

Bioventus may not develop or in-license additional proprietary technologies that are patentable;

 

   

Bioventus may not be able to obtain and maintain necessary licenses on commercially reasonable terms, or at all; and

 

   

the patents of others may adversely affect Bioventus’ business.

Should any of these events occur, they could adversely affect its business, results of operations and financial condition.

Risks Relating to Bioventus’ Organizational Structure and the Tax Receivable Agreement

Bioventus’ principal asset is Bioventus’ interest in BV LLC, and, accordingly, Bioventus depends on distributions from BV LLC to pay Bioventus’ taxes and expenses, including payments under the Tax Receivable Agreement. BV LLC’s ability to make such distributions may be subject to various limitations and restrictions.

Bioventus is a holding company and has no material assets other than Bioventus’ ownership of LLC interests of BV LLC. As such, Bioventus has no independent means of generating net sales or cash flow, and Bioventus’ ability to pay Bioventus’ taxes and operating expenses or declare and pay dividends in the future, if any, will be dependent upon the financial results and cash flows of BV LLC and its subsidiaries and distributions Bioventus

 

106


Table of Contents

receives from BV LLC. There can be no assurance that BV LLC and its subsidiaries will generate sufficient cash flow to distribute funds to Bioventus or that applicable state law and contractual restrictions, including negative covenants in Bioventus’ debt instruments, will permit such distributions.

BV LLC is treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to any entity-level U.S. federal income tax. Instead, taxable income will be allocated to holders of LLC interests, including Bioventus. Accordingly, Bioventus will incur income taxes on Bioventus’ allocable share of any net taxable income of BV LLC. Under the terms of the Bioventus LLC agreement, BV LLC will be obligated to make tax distributions to holders of LLC interests, including Bioventus, subject to any limitations or restrictions in Bioventus’ debt arrangements. In addition to tax expenses, Bioventus will also incur expenses related to Bioventus’ operations, including payments under the Tax Receivable Agreement (TRA), which Bioventus expects could be significant. See “Description of Bioventus’ Business—Tax Receivable Agreement.”

Bioventus intends, as its managing member, to cause BV LLC to make cash distributions to the owners of LLC interests, including Bioventus, in an amount sufficient to (i) fund their or Bioventus’ tax obligations in respect of allocations of taxable income from BV LLC and (ii) cover Bioventus’ operating expenses, including payments under the TRA. However, BV LLC’s ability to make such distributions may be subject to various limitations and restrictions, such as restrictions on distributions that would either violate any contract or agreement to which BV LLC is then a party, including debt agreements, or any applicable law, or that would have the effect of rendering BV LLC insolvent. If Bioventus does not have sufficient funds to pay taxes or other liabilities or to fund Bioventus’ operations, Bioventus may have to borrow funds, which could materially adversely affect Bioventus’ liquidity and financial condition and subject Bioventus to various restrictions imposed by any such lenders. To the extent that Bioventus is unable to make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the TRA and therefore accelerate payments due under the TRA. See “Description of Bioventus’ Business—Tax Receivable Agreement”. In addition, if BV LLC does not have sufficient funds to make distributions, Bioventus’ ability to declare and pay cash dividends will also be restricted or impaired.

The TRA with the continuing LLC owner requires Bioventus to make cash payments to it in respect of certain tax benefits to which Bioventus is or may become entitled, and Bioventus expects that the payments it will be required to make could be significant.

Bioventus is a party to a TRA with the continuing LLC owner. Under the TRA, Bioventus is required to make cash payments to the continuing LLC owner equal to 85% of the tax benefits, if any, that Bioventus actually realizes, or in certain circumstances are deemed to realize, as a result of (1) increases in the tax basis of assets of BV LLC resulting from (a) any future redemptions or exchanges of LLC interests described under “Description of Bioventus’ Business—Bioventus LLC Agreement—LLC Interest Redemption Right,” and (b) certain distributions (or deemed distributions) by BV LLC and (2) certain other tax benefits arising from payments under the TRA. Bioventus expects the amount of the cash payments that it will be required to make under the TRA will be significant. The actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including the timing of redemptions or exchanges by the continuing LLC owner, the amount of gain recognized by the continuing LLC owner, the amount and timing of the taxable income Bioventus generates in the future, and the federal tax rates then applicable. Any payments made by Bioventus to the continuing LLC owner under the TRA will generally reduce the amount of overall cash flow that might have otherwise been available to Bioventus. To the extent that Bioventus is unable to make timely payments under the TRA for any reason, the unpaid amounts will be deferred and will accrue interest until paid by Bioventus. Furthermore, Bioventus’ obligation to make payments under the TRA could make it a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that are the subject of the TRA. Payments under the TRA are not conditioned on the continuing LLC owner’s continued ownership of LLC interests or Bioventus class A common stock. For more information, see “Description of Bioventus’ Business—Tax Receivable Agreement.” The actual amounts Bioventus will be required to pay under the TRA will depend

 

107


Table of Contents

on, among other things, the timing of subsequent redemptions or exchanges of LLC interests by the continuing LLC owner, the price of Bioventus’ shares of Class A common stock at the time of each such redemption or exchange, and the amounts and timing of Bioventus’ future taxable income, and may be significantly different from the amounts described in the preceding sentence. Additionally, in certain cases such payments may be accelerated or significantly exceed the actual benefits Bioventus realize. In certain cases, payments under the TRA to the continuing LLC owners may be accelerated or significantly exceed the actual benefits Bioventus realizes in respect of tax attributes subject to the TRA.

Bioventus’ organizational structure, including the TRA, confers certain tax benefits upon the continuing LLC owner that may not benefit Class A common stockholders to the same extent as they will benefit the continuing LLC owner.

Bioventus’ organizational structure, including the TRA, confers certain tax benefits upon the continuing LLC owner that may not benefit the holders of Bioventus class A common stock to the same extent as they will benefit the continuing LLC owner. Bioventus entered into the TRA with BV LLC and the continuing LLC owner that provides for Bioventus’ payment to the continuing LLC owner of 85% of the amount of tax benefits, if any, that Bioventus actually realizes (or in some circumstances are deemed to realize) as a result of (i) increases in the tax basis of assets of BV LLC resulting from (a) any future redemptions or exchanges of LLC interests described under “Description of Bioventus’ Business—Bioventus LLC agreement—LLC Interest Redemption Right”, and (b) certain distributions (or deemed distributions) by BV LLC and (ii) certain other tax benefits arising from payments under the TRA. Although Bioventus will retain 15% of such tax benefits, this and other aspects of Bioventus’ organizational structure may adversely impact the future trading market for the Class A common stock.

In certain cases, payments under the TRA to the continuing LLC owner may be accelerated or significantly exceed the actual benefits Bioventus realizes in respect of the tax attributes subject to the TRA.

The TRA provides that if (i) Bioventus materially breaches any of Bioventus’ material obligations under the TRA, (ii) certain mergers, asset sales, other forms of business combinations or other changes of control were to occur on or before December 31, 2021 or (iii) Bioventus elects an early termination of the TRA, then Bioventus’ obligations or Bioventus’ successor’s obligations under the TRA to make payments thereunder would be based on certain assumptions, including an assumption that Bioventus would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the TRA (or, in the case of certain mergers, asset sales, other forms of business combinations or other changes of control occurring after December 31, 2021, that Bioventus would have taxable income at least equal to Bioventus’ times the highest taxable income in any of the Bioventus’ fiscal quarters ending prior to the closing date of such transaction (increased by 10% for each taxable year beginning with the second taxable year following such closing date)).

As a result of the foregoing, (i) Bioventus could be required to make payments under the TRA that are greater than the specified percentage of the actual benefits Bioventus ultimately realizes in respect of the tax benefits that are subject to the TRA and (ii) if Bioventus materially breaches any of its material obligations under the TRA or if Bioventus elected to terminate the TRA early, it would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the TRA, which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits. In these situations, Bioventus’ obligations under the TRA could have a substantial negative impact on its liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. There can be no assurance that Bioventus will be able to fund or finance its obligations under the TRA. Bioventus may elect to completely terminate the TRA early only with the written approval of a majority of its directors other than any directors that have been appointed or designated by the continuing LLC owner or any of such person’s affiliates.

 

108


Table of Contents

Bioventus may make payments to the continuing LLC owner under the TRA that exceed the tax benefits actually realized by it in the event that any tax benefits are disallowed by a taxing authority.

Payments under the TRA are based on the tax reporting positions that Bioventus determines, and the Internal Revenue Service (IRS) or another tax authority may challenge all or part of the tax basis increases, as well as other related tax positions Bioventus takes, and a court could sustain such challenge. Pursuant to the TRA, the continuing LLC owner is required to reimburse Bioventus for any cash payments previously made to it under the TRA in the event that any tax benefits actually realized by Bioventus and for which payment has been made under the TRA are subsequently challenged by a taxing authority and are ultimately disallowed. In addition, but without duplication of any amounts previously reimbursed by the continuing LLC owner, any excess cash payments made by Bioventus to the continuing LLC owner will be netted against any future cash payments that Bioventus might otherwise be required to make to the continuing LLC owner under the terms of the TRA. However, Bioventus might not determine that it has effectively made an excess cash payment to the continuing LLC owner for a number of years following the initial time of such payment. Moreover, there can be no assurance that any excess cash payments for which the continuing LLC owner has a reimbursement obligation under the TRA will be repaid to Bioventus. As a result, payments could be made under the TRA in excess of the tax savings that Bioventus realizes in respect of the tax attributes with respect to the continuing LLC owner that are the subject of the TRA.

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of Bioventus’ income or other tax returns could adversely affect its results of operations and financial condition.

Bioventus is subject to taxes by the U.S. federal, state, local and foreign tax authorities, and Bioventus’ tax liabilities will be affected by the allocation of expenses to differing jurisdictions. Bioventus’ future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

 

   

changes in the valuation of Bioventus’ deferred tax assets and liabilities;

 

   

expected timing and amount of the release of any tax valuation allowances;

 

   

tax effects of equity-based compensation;

 

   

changes in tax laws, regulations or interpretations thereof; or

 

   

future earnings being lower than anticipated in countries where Bioventus has lower statutory tax rates and higher than anticipated earnings in countries where it has higher statutory tax rates.

In addition, Bioventus may be subject to audits of its income, sales and other transaction taxes by U.S. federal, state, local and foreign taxing authorities. Outcomes from these audits could adversely affect its business, results of operations and financial condition.

If Bioventus was deemed to be an investment company under the Investment Company Act of 1940, as amended, or the 1940 Act, as a result of Bioventus’ ownership of BV LLC, applicable restrictions could make it impractical for Bioventus to continue its business as contemplated and could adversely affect its business, results of operations and financial condition.

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Bioventus does not believe that it is an “investment company,” as such term is defined in either of those sections of the 1940 Act.

As the sole managing member of BV LLC, Bioventus controls and operates BV LLC. On that basis, Bioventus believes that its interest in BV LLC is not an “investment security” as that term is used in the 1940 Act.

 

109


Table of Contents

However, if Bioventus was to cease participation in the management of BV LLC, Bioventus’ interest in BV LLC could be deemed an “investment security” for purposes of the 1940 Act.

Bioventus and BV LLC intend to conduct Bioventus’ operations so that it will not be deemed an investment company. However, if Bioventus was to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on its capital structure and its ability to transact with affiliates, could make it impractical for Bioventus to continue its business as contemplated and could adversely affect its business, results of operations and financial condition.

Bioventus is controlled by the original LLC owners, whose interests may differ from those of Bioventus’ public stockholders.

As of March 22, 2021, the original LLC owners control approximately 83.8% of the combined voting power of Bioventus’ common stock through their ownership of both Bioventus class A common stock and Bioventus class B common stock. The original LLC owners will, for the foreseeable future, have the ability to substantially influence Bioventus through their ownership position over corporate management and affairs, and will be able to control virtually all matters requiring stockholder approval. The original LLC owners are able to, subject to applicable law, and the voting arrangements described in the stockholders agreement, elect a majority of the members of Bioventus’ Board control actions to be taken by Bioventus and Bioventus board, including amendments to Bioventus’ certificate of incorporation and bylaws and approval of significant corporate transactions, including mergers and sales of substantially all of Bioventus’ assets. The directors so elected will have the authority, subject to the terms of Bioventus’ indebtedness and applicable rules and regulations, to issue additional stock, implement stock repurchase programs, declare dividends and make other decisions. It is possible that the interests of the original LLC owners may in some circumstances conflict with Bioventus’ interests and the interests of its other stockholders, including you. For example, the continuing LLC owner may have different tax positions from Bioventus, especially in light of the TRA that could influence Bioventus’ decisions regarding whether and when to dispose of assets, whether and when to incur new or refinance existing indebtedness, and whether and when Bioventus should terminate the TRA and accelerate its obligations thereunder. In addition, the determination of future tax reporting positions and the structuring of future transactions may take into consideration the continuing LLC owner’s tax or other considerations, which may differ from the considerations of Bioventus or Bioventus’ other stockholders.

Risks Relating to Ownership of Bioventus’ Class A Common Stock

In the past, Bioventus identified material weaknesses in its internal control over financial reporting. If Bioventus experiences additional material weaknesses in the future or otherwise fails to maintain an effective system of internal controls, Bioventus may not be able to accurately or timely requirements applicable to public companies, which may adversely affect investor confidence in Bioventus, and, as a result, the market price of Bioventus class A common stock.

Ensuring that Bioventus has adequate internal financial and accounting controls and procedures in place so that it can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Bioventus’ internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

A material weakness is a deficiency, or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of Bioventus’ financial statements will not be prevented or detected on a timely basis.

In connection with the audit of Bioventus’ consolidated financial statements as of and for the year ended December 31, 2020, Bioventus determined that it no longer has a material weakness associated with the proper

 

110


Table of Contents

processing of Exogen reimbursement claims in accordance with regulations and contractual terms. Bioventus implemented measures designed to improve its internal control over financial reporting to remediate such material weakness. These efforts included:

 

   

the augmentation, reorganization and training of Bioventus’ prescription to cash staff, which includes its direct sales team, order management personnel, patient financial services personnel and reimbursement services and accounts receivable personnel, regarding key aspects of regulations and requirements and how to deal with inconsistencies within patient medical records;

 

   

implementation of monthly sales order testing on sampling basis by Bioventus’ Compliance department including a review of medical necessity;

 

   

establishment of a cross functional governance committee, reporting to an executive steering committee to review and approve Bioventus’ Exogen Medicare policy and oversee future Exogen policy and process interpretations and changes; and

 

   

implementation of a checklist to be completed for each Medicare order to ensure compliance with Bioventus’ policy for Medicare claims and then further automating this checklist.

Bioventus cannot assure you that the measures Bioventus has taken to date, and actions Bioventus may take in the future, will be sufficient to prevent or avoid potential future material weaknesses. If Bioventus identifies any additional material weaknesses, the accuracy and timing of its financial reporting may be adversely affected, Bioventus may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in its financial reporting, and the market price of its Class A common stock may decline as a result. Bioventus could also become subject to investigations by the SEC or other regulatory authorities, which could require additional financial and management resources.

Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could adversely affect Bioventus’ business and stock price.

Bioventus is required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in its quarterly and annual reports and provide an annual management report on the effectiveness of internal controls over financial reporting. Though Bioventus will be required to disclose changes made in its internal controls and procedures on a quarterly basis, Bioventus will not be required to make Bioventus’ first annual assessment of its internal control over financial reporting pursuant to Section 404 until the year following its first annual report required to be filed with the SEC. However, as an emerging growth company, Bioventus’ independent registered public accounting firm will not be required to formally attest to the effectiveness of its internal control over financial reporting pursuant to Section 404 until the later of the year following its first annual report required to be filed with the SEC or the date it is no longer an emerging growth company. At such time, Bioventus’ independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which Bioventus’ controls are documented, designed or operating.

To comply with the requirements of being a public company, Bioventus has undertaken various actions, and may need to take additional actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff. Testing and maintaining internal controls can divert Bioventus’ management’s attention from other matters that are important to the operation of Bioventus’ business. Additionally, when evaluating Bioventus’ internal controls over financial reporting, Bioventus may identify material weaknesses that Bioventus may not be able to remediate in time to meet the applicable deadline imposed upon Bioventus for compliance with the requirements of Section 404. If Bioventus identifies any material weaknesses in Bioventus’ internal controls over financial reporting or are unable to comply with the requirements of Section 404 in a timely manner or assert that Bioventus’ internal controls over financial reporting is effective, or if Bioventus’ independent registered public accounting firm is unable to express an opinion as to the effectiveness of

 

111


Table of Contents

Bioventus’ internal controls over financial reporting once Bioventus is no longer an emerging growth company, investors may lose confidence in the accuracy and completeness of Bioventus’ financial reports and the market price of Bioventus class A common stock could be adversely affected, and Bioventus could become subject to investigations by the stock exchange on which Bioventus’ securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.

Bioventus is a “controlled company” within the meaning of Nasdaq listing standards and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

The former LLC owners and continuing LLC owner (“Voting Group”), which holds Bioventus class A common stock and Bioventus class B common stock representing approximately 83.8% of the combined voting power of Bioventus’ common stock, entered into a stockholders agreement filed as exhibit 10.4 hereto. For a period of time, the parties to the stockholders agreement will agree to vote their shares of Bioventus class A common stock and Bioventus class B common stock in favor of the election of the nominees of certain members of the Voting Group to Bioventus’ Board upon their nomination by the nominating and corporate governance committee of Bioventus’ Board.

Because of the stockholders agreement and the aggregate voting power over Bioventus class A common stock and Bioventus class B common stock held by the parties to the stockholders agreement, Bioventus is considered a “controlled company” for the purposes of Nasdaq. As such, Bioventus is exempt from certain corporate governance requirements of Nasdaq, including (1) the requirement that a majority of the Board consist of independent directors, (2) the requirement that Bioventus has a nominating and corporate governance committee that is composed entirely of independent directors and (3) the requirement that Bioventus has a compensation committee that is composed entirely of independent directors. Bioventus intends to rely on some or all of these exemptions. As a result, Bioventus does not have a majority of independent directors and Bioventus’ compensation and nominating and corporate governance committees do not consist entirely of independent directors. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

Taking advantage of the reduced disclosure requirements applicable to “emerging growth companies” may make Bioventus class A common stock less attractive to investors.

The JOBS Act provides that, so long as a company qualifies as an “emerging growth company,” it will, among other things:

 

   

be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting;

 

   

be exempt from the “say on pay” and “say on golden parachute” advisory vote requirements of the Dodd-Frank Wall Street Reform and Customer Protection Act, or the Dodd-Frank Act;

 

   

be exempt from certain disclosure requirements of the Dodd-Frank Act relating to compensation of its executive officers and be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act; and

 

   

be permitted to provide a reduced level of disclosure concerning executive compensation and be exempt from any rules that have been adopted by the Public Company Accounting Oversight Board requiring a supplement to the auditor’s report on the financial statements or that may be adopted requiring mandatory audit firm rotations.

Bioventus is an “emerging growth company,” as defined in the JOBS Act, and Bioventus could be an emerging growth company for up to five years following its IPO. For as long as Bioventus continues to be an emerging

 

112


Table of Contents

growth company, Bioventus may choose to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies. Bioventus has irrevocably elected not to take advantage of the extension of time to comply with new or revised financial accounting standards available under Section 107(b) of the JOBS Act. Bioventus has also taken advantage of certain reduced reporting burdens in this joint proxy statement/prospectus. Bioventus could be an emerging growth company for up to five years after its IPO and will continue to be an emerging growth company unless Bioventus’ total annual gross revenues are $1.07 billion or more, Bioventus has issued more than $1 billion in non-convertible debt in the past three years or Bioventus becomes a “large accelerated filer” as defined in the Exchange Act. If Bioventus remains an “emerging growth company”, Bioventus may take advantage of other exemptions, including the exemptions from the advisory vote requirements and executive compensation disclosures under the Dodd-Frank Act and the exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act. Bioventus cannot predict if investors will find its Bioventus class A common stock less attractive if Bioventus elects to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of Bioventus class A common stock. Also, as a result of Bioventus’ intention to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to Bioventus as long as Bioventus qualifies as an “emerging growth company,” Bioventus’ financial statements may not be comparable to those of companies that fully comply with regulatory and reporting requirements upon the public company effective dates.

Bioventus does not currently expect to pay any cash dividends.

Bioventus does not anticipate declaring or paying any cash dividends to holders of its Bioventus class A common stock in the foreseeable future. Bioventus currently intends to retain future earnings, if any, to finance its growth. Any determination to pay cash dividends in the future will be at the sole discretion of Bioventus’ Board, subject to limitations under applicable law and may be discontinued at any time. In addition, Bioventus’ ability to pay cash dividends is currently restricted by the terms of Bioventus’ 2019 Credit Agreement. Therefore, you are not likely to receive any dividends on your Bioventus class A common stock for the foreseeable future, and the success of an investment in Bioventus class A common stock will depend upon any future appreciation in its value. Consequently, investors may need to sell all or part of their holdings of Bioventus class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. There is no guarantee that Bioventus class A common stock will appreciate in value or even maintain the price at which Bioventus’ stockholders have purchased Bioventus class A common stock. Investors seeking cash dividends should not purchase Bioventus class A common stock.

In addition, Bioventus’ operations are currently conducted entirely through BV LLC and its subsidiaries and Bioventus’ ability to generate cash to meet its debt service obligations or to make future dividend payments, if any, is highly dependent on the earnings and the receipt of funds from BV LLC and its subsidiaries via dividends or intercompany loans.

Bioventus’ amended and restated certificate of incorporation, to the extent permitted by applicable law, contains provisions renouncing Bioventus’ interest and expectation to participate in certain corporate opportunities identified or presented to certain of its original LLC owners.

Certain of the original LLC owners are in the business of making or advising on investments in companies and these Original LLC owners may hold, and may, from time to time in the future, acquire interests in or provide advice to businesses that directly or indirectly compete with certain portions of Bioventus’ business or the business of Bioventus’ suppliers. Bioventus’ amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, none of the original LLC owners or any director who is not employed by Bioventus or his or her affiliates will have any duty to refrain from engaging in a corporate opportunity in the same or similar lines of business as Bioventus. The original LLC owners may also pursue acquisitions that may be complementary to Bioventus’ business, and, as a result, those acquisition opportunities may not be available to Bioventus. As a result, these arrangements could adversely affect Bioventus’ business, results of operations,

 

113


Table of Contents

financial condition or prospects if attractive business opportunities are allocated to any of the original LLC owners instead of to Bioventus.

Bioventus may issue shares of preferred stock in the future, which could make it difficult for another company to acquire Bioventus or could otherwise adversely affect holders of Bioventus class A common stock, which could depress the price of Bioventus class A common stock.

Bioventus’ amended and restated certificate of incorporation will authorize Bioventus to issue one or more series of preferred stock. Bioventus’ Board will have the authority to determine the preferences, limitations and relative rights of the shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by Bioventus’ stockholders. Bioventus’ preferred stock could be issued with voting, liquidation, dividend and other rights superior to the rights of Bioventus class A common stock. The potential issuance of preferred stock may delay or prevent a change in control of Bioventus, discourage bids for Bioventus class A common stock at a premium to the market price, and materially and adversely affect the market price and the voting and other rights of the holders of Bioventus class A common stock.

Anti-takeover provisions in Bioventus’ governing documents and under Delaware law could make an acquisition of its company more difficult, limit attempts by Bioventus’ stockholders to replace or remove Bioventus’ current management, and depress the market price of Bioventus’ common stock.

Bioventus’ amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions that could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by Bioventus’ Board and include the following provisions:

 

   

authorizing the issuance of “blank check” preferred stock that could be issued by Bioventus’ Board to increase the number of outstanding shares and thwart a takeover attempt;

 

   

establishing a classified Board so that not all members of Bioventus’ Board are elected at one time;

 

   

the removal of directors only for cause;

 

   

prohibiting the use of cumulative voting for the election of directors;

 

   

limiting the ability of stockholders to call special meetings or amend Bioventus’ bylaws;

 

   

requiring all stockholder actions to be taken at a meeting of Bioventus’ stockholders; and

 

   

establishing advance notice and duration of ownership requirements for nominations for election to the Board or for proposing matters that can be acted upon by stockholders at stockholder meetings.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in Bioventus’ management. As a Delaware corporation, Bioventus is also subject to provisions of Delaware law, including Section 203 of the DGCL, which prevents interested stockholders, such as certain stockholders holding more than 15% of Bioventus’ outstanding common stock from engaging in certain business combinations unless (i) prior to the time such stockholder became an interested stockholder, the board approved the transaction that resulted in such stockholder becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in such stockholder becoming an interested stockholder, the interested stockholder owned 85% of the common stock or (iii) following board approval, the business combination receives the approval of the holders of at least two-thirds of Bioventus’ outstanding common stock not held by such interested stockholder. Because Bioventus has “opted out” of Section 203 of the DGCL in its amended and restated certificate of incorporation, the statute will not apply to business combinations involving Bioventus.

Any provision of Bioventus’ amended and restated certificate of incorporation, amended and restated bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for Bioventus’ stockholders to receive a premium for their shares of Bioventus’ common stock and could also affect the price that some investors are willing to pay for Bioventus’ common stock.

 

114


Table of Contents

Bioventus’ amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between Bioventus and Bioventus’ stockholders, which could limit Bioventus’ stockholders’ ability to obtain a favorable judicial forum for disputes with Bioventus or Bioventus’ directors, officers or employees.

Bioventus’ amended and restated certificate of incorporation provides that, unless Bioventus consents to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for: (a) any derivative action, suit or proceeding brought on its behalf; (b) any action, suit or proceeding asserting a claim of breach of fiduciary duty owed by any of Bioventus’ directors, officers or stockholders to Bioventus or to Bioventus’ stockholders; (c) any action, suit or proceeding arising pursuant to any provision of the DGCL, Bioventus’ amended and restated certificate of incorporation or amended bylaws (as either may be amended from time to time); or, (d) any action, suit or proceeding asserting a claim governed by the internal affairs doctrine; provided that the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Bioventus or Bioventus’ directors, officers or other employees, which may discourage such lawsuits against Bioventus and Bioventus’ directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in Bioventus’ amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, Bioventus may incur additional costs associated with resolving such action in other jurisdictions, which could harm its business, results of operations and financial condition.

Risks Relating to the Proposed Acquisition of Misonix

Bioventus is subject to various risks related to the proposed acquisition of Misonix.

Bioventus has entered into a merger agreement with Misonix pursuant to which Bioventus has agreed to acquire Misonix. The risks, contingencies and other uncertainties that could result in the failure of the proposed acquisition to be completed or, if completed, that could have a material adverse effect on Bioventus’ business, financial condition or results of operations following the proposed acquisition, and any anticipated benefits of the proposed acquisition, include:

 

   

the failure to obtain necessary stockholder approvals for the share issuance and the adoption of the merger agreement;

 

   

the failure to satisfy required closing conditions or complete the proposed acquisition in a timely manner or at all;

 

   

the effect of the announcement of the proposed acquisition on each company’s ability to retain and hire key personnel, maintain business relationships, and on operating results and the businesses generally;

 

   

the ability of Misonix to pursue alternatives to the proposed acquisition with us pursuant to the merger agreement;

 

   

the diversion of Bioventus’ management’s attention from its core business as Bioventus works to take all steps necessary to close the transaction and integrate Misonix’s business into Bioventus’;

 

   

the issuance of additional equity in connection with the acquisition may dilute Bioventus’ stockholders and the uncertainties related to the potential impact of the proposed acquisition on Bioventus’ stock price;

 

   

the inability to achieve the anticipated synergies and Bioventus’ incurrence of significant transaction related costs in connection with the proposed acquisition that are, and will be, incurred regardless of whether the proposed acquisition is completed; and

 

   

the occurrence of any event giving rise to the right to terminate the merger agreement.

 

115


Table of Contents

Bioventus’ future results following the proposed acquisition will suffer if Bioventus does not effectively manage the expanded operations or successfully integrate the businesses of Misonix.

Bioventus’ future success will depend, in part, upon its ability to manage the expanded business, including challenges related to the management and monitoring of new operations and associated increased costs and complexity associated with the acquisition of Misonix and other acquisitions. If Bioventus is not able to successfully complete integrations in an efficient and effective manner, the anticipated benefits of these acquisitions may not be realized fully, or at all, or may take longer to realize than expected, and the value of Bioventus’ common stock may be affected adversely. An inability to realize the full extent of the anticipated benefits of the proposed acquisitions, as well as any delays encountered in the integration processes, could have an adverse effect upon on Bioventus’ business, financial condition or results of operations. In addition, the actual integrations may result in additional and unforeseen expenses, including increased legal, accounting and compliance costs.

Failure to complete the proposed acquisition may negatively impact Bioventus’ share price, the future business and Bioventus’ financial results.

If the proposed acquisition is not completed on a timely basis, Bioventus’ and Misonix ongoing businesses may be adversely affected. If the proposed acquisition is not completed at all, Bioventus will be subject to a number of risks, including the following:

 

   

being required to pay costs and expenses relating to the transactions, such as legal, accounting, financial advisory and printing fees; and

 

   

time and resources committed by Bioventus’ management to matters relating to the proposed acquisition could otherwise have been devoted to pursuing other beneficial opportunities.

If the proposed acquisition is not completed, the price of Bioventus’ common stock may decline to the extent that the current market price reflects a market assumption that the proposed acquisition will be completed and that the related benefits will be realized, or a market perception that the proposed acquisition was not completed due to an adverse change in Bioventus’ business.

Other Risk Factors of Misonix

Misonix’s business is and will be subject to the risks described above. In addition, Misonix is, and will continue to be, subject to the risks described in its Annual Report on Form 10-K for the fiscal year ended June 30, 2021, as such risks may be updated or supplemented in Misonix’s subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, each of which are filed with the SEC and incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information.”

 

116


Table of Contents

THE PARTIES TO THE MERGER

Bioventus Inc.

4721 Emperor Boulevard, Suite 400

Durham, North Carolina 27703

(919) 474-6700

Bioventus is a global leader of innovations for active healing. Through a combination of internal product development, product/business acquisition, and distribution agreements, it will bring to market products which address a growing need for clinically effective, cost efficient, minimally invasive medical treatments, that engage and enhance the body’s natural healing processes. Bioventus’ principal place of business is 4721 Emperor Boulevard, Suite 100, Durham, North Carolina 27703, and its telephone number is (919) 474-6700.

Bioventus is a Delaware corporation and Bioventus common stock is listed on Nasdaq under the ticker symbol “BVS.”

For more information about Bioventus, visit Bioventus’ website at www.bioventus.com. The information contained on or accessible through Bioventus’ website (other than the documents incorporated by reference herein) does not constitute a part of this joint proxy statement/prospectus or any other report or document on file with or furnished to the SEC. Additional information about Bioventus is included in the documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information.”

Misonix, Inc.

1938 New Highway

Farmingdale, New York

(631) 694-9555

Misonix designs, manufactures and markets minimally invasive surgical ultrasonic medical devices. These products are used for precise bone sculpting, removal of soft and hard tumors, and tissue debridement, primarily in the areas of neurosurgery, orthopedic surgery, plastic surgery, wound care and maxillo-facial surgery. Misonix also exclusively markets, sells and distributes skin allografts and wound care products used to support healing of wounds, and which complement Misonix’s ultrasonic medical devices Misonix’s principal place of business is 1938 New Highway, Farmingdale, New York, and its telephone number is (631) 694-9555.

Misonix is a Delaware corporation and Misonix common stock is listed on Nasdaq under the ticker symbol “MSON.”

For more information about Misonix, visit Misonix’s website at www.Misonix.com. The information contained on or accessible through Misonix’s website (other than the documents incorporated by reference herein) does not constitute a part of this joint proxy statement/prospectus or any other report or document on file with or furnished to the SEC. Additional information about Misonix is included in the documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information.”

Oyster Merger Sub I, Inc.

4721 Emperor Boulevard, Suite 100

Durham, North Carolina 27703

(919) 474-6700

Merger Sub I was formed by Bioventus solely in contemplation of the merger, has not conducted any business and has no assets, liabilities or obligations of any nature other than as set forth in the merger agreement. By operation of the merger, Merger Sub I will be merged with and into Misonix, with Misonix continuing as the surviving corporation. Merger Sub I’s principal executive offices are located at 4721 Emperor Boulevard, Suite 100, Durham, North Carolina 27703, and its telephone number is (919) 474-67002485.

 

117


Table of Contents

Oyster Merger Sub II, LLC

4721 Emperor Boulevard, Suite 100

Durham, North Carolina 27703

(919) 474-6700

Merger Sub II was formed by Bioventus solely in contemplation of the merger, has not conducted any business and has no assets, liabilities or obligations of any nature other than as set forth in the merger agreement. By operation of the merger, following the first merger, Misonix will be merged with and into Merger Sub II, with Merger Sub II continuing as the surviving entity (renamed as Misonix LLC) and a wholly owned subsidiary of Bioventus. Merger Sub II’s principal executive offices are located at 4721 Emperor Boulevard, Suite 100, Durham, North Carolina 27703, and its telephone number is (919) 474-6700.

 

118


Table of Contents

THE BIOVENTUS SPECIAL MEETING

This joint proxy statement/prospectus is being provided to Bioventus stockholders in connection with the solicitation of proxies by the Bioventus board for use at the Bioventus special meeting and at any adjournments or postponements thereof. Bioventus stockholders are encouraged to read this entire document carefully, including its annexes and the documents incorporated by reference herein, for more detailed information regarding the merger agreement and the transactions contemplated thereby.

Date, Time and Place of the Bioventus Special Meeting

The Bioventus special meeting is scheduled to be held virtually via live webcast on October 26, 2021, beginning at 11:00 a.m., Eastern Time, unless postponed to a later date.

In light of ongoing developments related to the COVID-19 pandemic, Bioventus has elected to hold the Bioventus special meeting solely by means of remote communication via live webcast. Bioventus stockholders will be able to virtually attend and vote at the Bioventus special meeting by visiting www.virtualshareholdermeeting.com/BVS2021SM, which is referred to as the “Bioventus special meeting website.” Bioventus stockholders will need the 16-digit control number found on their proxy card in order to access the Bioventus special meeting website and to access the list of Bioventus stockholders entitled to vote at the Bioventus special meeting during the time of the meeting.

Bioventus has retained Broadridge to host the live webcast of the Bioventus special meeting. Thirty minutes prior to the Bioventus special meeting, Broadridge may be contacted at (855) 499-0991 (U.S. toll-free) or (720) 378-5962 (international toll), and will be available to answer any questions regarding how to virtually attend the Bioventus special meeting or if you encounter any technical difficulty accessing or during the Bioventus special meeting. Technical support phone numbers will also be available via the virtual meeting url 30 minutes prior to the start of the meeting.

Matters to Be Considered at the Bioventus Special Meeting

The purpose of the Bioventus special meeting is to consider and vote on each of the following proposals, each of which is further described in this joint proxy statement/prospectus:

 

   

Bioventus Proposal 1: Approval of the Share Issuance. To consider and vote on the Bioventus share issuance proposal; and

 

   

Bioventus Proposal 2: Adjournment of the Bioventus Special Meeting. To consider and vote on the Bioventus adjournment proposal.

Recommendation of the Bioventus Board of Directors

The Bioventus board unanimously recommends that Bioventus stockholders vote:

 

   

Bioventus Proposal 1:FOR” the Bioventus share issuance proposal; and

 

   

Bioventus Proposal 2:FOR” the Bioventus adjournment proposal.

After careful consideration, the Bioventus board unanimously: (i) determined that the terms of the merger agreement and the merger are fair to and in the best interests of Bioventus and its stockholders; (ii) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger and the share issuance, each on the terms and subject to the conditions set forth in the merger agreement; and (iii) recommended that Bioventus stockholders approve of the Bioventus share issuance proposal. See “The Mergers—Recommendation of the Bioventus Board of Directors; Bioventus’s Reasons for the Merger.”

 

119


Table of Contents

Record Date for the Bioventus Special Meeting and Voting Rights

The record date to determine Bioventus stockholders who are entitled to receive notice of and to vote at the Bioventus special meeting or any adjournments or postponements thereof is September 22, 2021. As of the close of business on the Bioventus record date, there were 56,849,338 shares of Bioventus common stock issued and outstanding and entitled to vote at the Bioventus special meeting. Each Bioventus stockholder is entitled to one vote for each share of Bioventus common stock such holder owned of record at the close of business on the Bioventus record date with respect to each matter properly brought before the Bioventus special meeting. Only Bioventus stockholders of record at the close of business on the Bioventus record date are entitled to receive notice of and to vote at the Bioventus special meeting and any and all adjournments or postponements thereof.

Quorum; Abstentions and Broker Non-Votes

A quorum of Bioventus stockholders is necessary to conduct the Bioventus special meeting. The presence, virtually via the Bioventus special meeting website or by proxy, of the holders of a majority in voting power of the stock issued and outstanding and entitled to vote at the Bioventus special meeting will constitute a quorum. Shares of Bioventus common stock represented at the Bioventus special meeting by virtual attendance via the Bioventus special meeting website or by proxy and entitled to vote, but not voted, including shares for which an Bioventus stockholder directs an “abstention” from voting, will be counted for purposes of determining a quorum. However, because all of the proposals for consideration at the Bioventus special meeting are considered “non-routine” matters under Nasdaq rules (as described below), shares held in “street name” will not be counted as present for the purpose of determining the existence of a quorum unless the Bioventus stockholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals at the Bioventus special meeting. If a quorum is not present, the Bioventus special meeting will be adjourned or postponed until the holders of the number of shares of Bioventus common stock required to constitute a quorum attend.

Under Nasdaq rules, banks, brokers or other nominees who hold shares in “street name” on behalf of the beneficial owner of such shares have the authority to vote such shares in their discretion on certain “routine” proposals when they have not received voting instructions from the beneficial owners. However, banks, brokers or other nominees are not allowed to exercise their voting discretion with respect to matters that under Nasdaq rules are “non-routine.” This can result in a “broker non-vote,” which occurs on an item when (i) a bank, broker or other nominee has discretionary authority to vote on one or more “routine” proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other “non-routine” proposals without instructions from the beneficial owner of the shares, and (ii) the beneficial owner fails to provide the bank, broker or other nominee with voting instructions on a “non-routine” matter. All of the proposals before the Bioventus special meeting are considered “non-routine” matters under Nasdaq rules, and banks, brokers or other nominees will not have discretionary authority to vote on any matter before the Bioventus special meeting. As a result, Bioventus does not expect any broker non-votes at the Bioventus special meeting and if you hold your shares of Bioventus common stock in “street name,” your shares will not be represented and will not be voted on any matter unless you affirmatively instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instructions provided by your bank, broker or other nominee. It is therefore critical that you cast your vote by instructing your bank, broker or other nominee on how to vote. Brokers will not be able to vote on any of the proposals before the Bioventus special meeting unless they have received voting instructions from the beneficial owners.

 

120


Table of Contents

Required Votes

Except for the Bioventus adjournment proposal, the vote required to approve each of the proposals listed below assumes the presence of a quorum at the Bioventus special meeting. As described above, Bioventus does not expect there to be any broker non-votes at the Bioventus special meeting.

 

Proposal

  

Required Vote

  

Effects of Certain Actions

Bioventus Proposal 1:

Bioventus share issuance proposal

   Assuming a quorum is present at the Bioventus special meeting, approval requires the affirmative vote of the holders of a majority in voting power of the votes cast on the Bioventus share issuance proposal.    Any shares not virtually present or represented by proxy (including due to the failure of an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Bioventus share issuance proposal.
      An abstention or other failure of any shares virtually present or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus share issuance proposal to vote on the Bioventus share issuance proposal will have the same effect as a vote “AGAINST” the Bioventus share issuance proposal. However, assuming a quorum is present at the Bioventus special meeting, if an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Bioventus share issuance proposal, voting power will deemed to be withheld with respect to the Bioventus share issuance proposal and such failure to provide voting instructions will have no effect on the Bioventus share issuance proposal.

Bioventus Proposal 2:

Bioventus adjournment proposal

   Whether or not a quorum is present at the Bioventus special meeting, approval of the Bioventus adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast on the Bioventus adjournment proposal.   

Any shares not virtually present or represented by proxy (including due to the failure of an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Bioventus adjournment proposal.

 

An abstention or other failure of any shares virtually present or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus adjournment proposal will have the same effect as a vote “AGAINST” the Bioventus adjournment proposal. However, if an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Bioventus adjournment proposal, voting power will deemed to be withheld with respect to the Bioventus adjournment proposal and such failure to provide voting instructions will have no effect on the Bioventus adjournment proposal.

 

121


Table of Contents

Bioventus Support Agreement

Subsequent to the execution of the merger agreement, Misonix entered into the Bioventus support agreement with the Bioventus supporting stockholders, pursuant to which such stockholders have agreed, among other things, to vote the shares of Bioventus common stock that they beneficially own at the time such vote is taken in favor of Bioventus share issuance proposal and against approval of any proposal made in opposition to, in competition with, or inconsistent with, the merger agreement or the transaction. As of the record date for the Bioventus special meeting, such stockholders beneficially own approximately 67.4% of the outstanding shares of Bioventus common stock. Therefore, the Bioventus supporting stockholders hold a sufficient number of shares of Bioventus common stock in order to approve the Bioventus share issuance proposal. On July 29, 2021, in connection with execution of the merger agreement, each of the Bioventus supporting stockholders have entered into lock up agreements with Bioventus (each a “lock up agreement”) restricting the sale and transfer of the capital stock of Bioventus for a period of 90 or 180 days, subject to the terms of the lock up agreement.

Vote of Bioventus Directors and Executive Officers

As of September 1, 2021, the latest practicable date prior to the date of this joint proxy statement/prospectus, Bioventus directors and executive officers, and their affiliates, as a group, owned and were entitled to vote less than 1% of the total outstanding shares of Bioventus common stock. Although none of them has entered into any agreement obligating them to do so, Bioventus currently expects that all Bioventus directors and executive officers will vote their shares “FOR” the Bioventus share issuance proposal and “FOR” the Bioventus adjournment proposal. See “Interests of Bioventus Directors and Executive Officers in the Merger” and “Bioventus Executive Officer and Director Compensation” in this joint proxy statement/prospectus.

Methods of Voting

Registered Stockholders

If you are an Bioventus stockholder of record, you may vote at the Bioventus special meeting by proxy over the Internet or telephone or by mail, or by virtually attending and voting at the Bioventus special meeting via the Bioventus special meeting website, as described below.

 

   

By Internet: By following the instructions provided on your proxy card.

 

   

By Telephone: By following the instructions provided on your proxy card.

 

   

By Mail: If you have received a paper copy of the proxy materials by mail, you may complete and return by mail the enclosed proxy card in the postage-paid envelope.

 

   

Virtually via the Bioventus Special Meeting Website: By visiting the Bioventus special meeting website, you can virtually attend and vote at the Bioventus special meeting. Bioventus stockholders who plan to virtually attend the Bioventus special meeting will need the 16-digit control number included on their proxy card in order to access the Bioventus special meeting website.

Unless revoked, all duly executed proxies representing shares of Bioventus common stock entitled to vote at the Bioventus special meeting will be voted at the Bioventus special meeting and, where a choice has been specified on the proxy card, will be voted in accordance with such specification. If you submit an executed proxy without providing instructions for any proposal, then the Bioventus officers identified on the proxy will vote your shares consistent with the recommendation of the Bioventus board on such proposal. If you are an Bioventus stockholder of record, proxies submitted over the internet or by telephone as described above must be received by 11:59 p.m, Eastern Time, on October 25, 2021. To reduce administrative costs and help the environment by conserving natural resources, Bioventus asks that you submit a proxy to vote your shares through the internet or by telephone.

By executing and delivering a proxy in connection with the Bioventus special meeting, you designate certain Bioventus officers identified therein as your proxies at the Bioventus special meeting. If you deliver an executed

 

122


Table of Contents

proxy, but do not specify a choice for any proposal properly brought before the Bioventus special meeting, such proxies will vote your shares of Bioventus common stock on such uninstructed proposal in accordance with the recommendation of the Bioventus board. Bioventus does not expect that any matter other than the proposals listed above will be brought before the Bioventus special meeting, and the Bioventus bylaws provide that the only business that may be conducted at the Bioventus special meeting are those proposals brought before the Bioventus special meeting by or at the direction of the Bioventus board.

Beneficial (Street Name) Stockholders

If you hold your shares of Bioventus common stock through a bank, broker or other nominee in “street name” instead of as a registered holder, you must follow the voting instructions provided by your bank, broker or other nominee in order to vote your shares. Your voting instructions must be received by your bank, broker or other nominee prior to the deadline set forth in the information from your bank, broker or other nominee on how to submit voting instructions. If you do not provide voting instructions to your bank, broker or other nominee for a proposal, your shares of Bioventus common stock will not be voted on that proposal because your bank, broker or other nominee does not have discretionary authority to vote on any of the proposals to be voted on at the Bioventus special meeting. See “—Quorum; Abstentions and Broker Non-Votes.”

If you hold your shares of Bioventus common stock through a bank, broker or other nominee in “street name” (instead of as a registered holder), you must obtain a specific control number from your bank, broker or other nominee in order to virtually attend and vote at the Bioventus special meeting via the Bioventus special meeting website. See “—Virtually Attending the Bioventus Special Meeting.”

Revocability of Proxies

Any Bioventus stockholder giving a proxy has the right to revoke it at any time before the proxy is voted at the Bioventus special meeting. If you are an Bioventus stockholder of record, you may revoke your proxy by any one of the following actions:

 

   

by sending a signed written notice of revocation to Bioventus’s Corporate Secretary, provided such notice is received no later than October 25, 2021;

 

   

by voting again over the internet or telephone as instructed on your proxy card before the closing of the voting facilities at 11:59 p.m, Eastern Time, on October 25, 2021;

 

   

by submitting a properly signed and dated proxy card with a later date that is received by Bioventus no later than the close of business on October 25, 2021; or

 

   

by virtually attending the Bioventus special meeting via the Bioventus special meeting website and requesting that your proxy be revoked, or virtually voting via the Bioventus special meeting website as described above.

Only your last submitted proxy will be considered.

Execution or revocation of a proxy will not in any way affect an Bioventus stockholder’s right to virtually attend and vote at the Bioventus special meeting via the Bioventus special meeting website.

Written notices of revocation and other communications relating to the revocation of proxies should be addressed to:

Bioventus Inc.

Attn: Corporate Secretary

Tony.dadamio@bioventus.com

4721 Emperor Boulevard, Suite 400

Durham, North Carolina 27703

 

123


Table of Contents

If your shares of Bioventus common stock are held in “street name” and you previously provided voting instructions to your broker, bank or other nominee, you should follow the instructions provided by your broker, bank or other nominee to revoke or change your voting instructions. You may also change your vote by obtaining your specific control number and instructions from your bank, broker or other nominee and voting your shares at the Bioventus special meeting via the Bioventus special meeting website.

Proxy Solicitation Costs

Bioventus is soliciting proxies to provide an opportunity to all Bioventus stockholders to vote on agenda items, whether or not such Bioventus stockholders are able to virtually attend the Bioventus special meeting or any adjournment or postponement thereof. Bioventus will bear the entire cost of soliciting proxies from Bioventus stockholders. In addition to the solicitation of proxies by mail, Bioventus will request that banks, brokers and other nominee record holders send proxies and proxy material to the beneficial owners of Bioventus common stock and secure their voting instructions, if necessary. Bioventus may be required to reimburse those banks, brokers and other nominees on request for their reasonable expenses in taking those actions.

Proxies may be solicited on behalf of Bioventus or by Bioventus directors, officers and other employees in person or by mail, telephone, facsimile, messenger, the internet or other means of communication, including electronic communication. Bioventus directors, officers and employees will not be paid any additional amounts for their services or solicitation in this regard.

Virtually Attending the Bioventus Special Meeting

If you wish to virtually attend the Bioventus special meeting via the Bioventus special meeting website, you must (i) be a Bioventus stockholder of record at the close of business on September 22, 2021 (the Bioventus record date), (ii) hold your shares of Bioventus common stock beneficially in the name of a broker, bank or other nominee as of the Bioventus record date or (iii) hold a valid proxy for the Bioventus special meeting.

To enter the Bioventus special meeting website and virtually attend the Bioventus special meeting, you will need the 16-digit control number located on your proxy card. If you hold your shares of Bioventus common stock in street name beneficially through a broker, bank or other nominee and you wish to virtually attend the Bioventus special meeting via the Bioventus special meeting website, you will need to obtain your specific control number and further instructions from your bank, broker or other nominee. The 16-digit control number is also needed to access the list of Bioventus stockholders entitled to vote at the Bioventus special meeting during the time of the meeting.

If you plan to virtually attend and vote at the Bioventus special meeting via the Bioventus special meeting website, Bioventus still encourages you to vote in advance by the internet, telephone or (if you received a paper copy of the proxy materials) by mail so that your vote will be counted even if you later decide not to virtually attend the Bioventus special meeting via the Bioventus special meeting website. Voting your proxy by the internet, telephone or mail will not limit your right to virtually attend and vote at the Bioventus special meeting via the Bioventus special meeting website if you later decide to do so.

Householding

SEC rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and notices with respect to two or more stockholders sharing the same address by delivering a single proxy statement or a single notice addressed to those stockholders. This process, which is commonly referred to as “householding,” provides cost savings for companies. Bioventus has previously adopted householding for Bioventus stockholders of record. As a result, Bioventus stockholders with the same address and last name may receive only one copy of this joint proxy statement/prospectus. Registered Bioventus stockholders (those who hold shares of Bioventus common stock directly in their name with Bioventus’s transfer agent) may opt out of householding and receive a separate joint proxy statement/prospectus or other proxy materials by sending a written request to Bioventus at the address below.

 

124


Table of Contents

Some brokers household proxy materials, delivering a single proxy statement or notice to multiple Bioventus stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or notice, or if your household is receiving multiple copies of these documents and you wish to request that future deliveries be limited to a single copy, please notify your broker.

Bioventus will promptly deliver a copy of this joint proxy statement/prospectus to any Bioventus stockholder who only received one copy of these materials due to householding upon request in writing to: Bioventus Inc., Attn: Corporate Secretary, tony.dadamio@bioventus.com, 4721 Emperor Boulevard, Suite 100, Durham, North Carolina 27703 or by calling (919) 474-6700.

Tabulation of Votes

The Bioventus board will appoint an independent inspector of election for the Bioventus special meeting. The inspector of election will, among other matters, determine the number of shares of Bioventus common stock virtually present or represented by proxy at the Bioventus special meeting to confirm the existence of a quorum, determine the validity of all proxies and ballots and certify the results of voting on all proposals submitted to Bioventus stockholders at the Bioventus special meeting.

Adjournments

If a quorum is present at the Bioventus special meeting but there are insufficient votes at the time of the Bioventus special meeting to approve the Bioventus share issuance proposal, then Bioventus stockholders may be asked to vote on the Bioventus adjournment proposal.

At any subsequent reconvening of the Bioventus special meeting at which a quorum is present, any business may be transacted that might have been transacted at the original meeting, and all proxies will be voted in the same manner as they would have been voted at the original convening of the Bioventus special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the time the proxy is voted at the reconvened meeting.

BIOVENTUS STOCKHOLDERS SHOULD CAREFULLY READ THIS JOINT PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY FOR MORE DETAILED INFORMATION CONCERNING THE MERGER AGREEMENT AND THE MERGER. IN PARTICULAR, BIOVENTUS STOCKHOLDERS ARE DIRECTED TO THE MERGER AGREEMENT, WHICH IS ATTACHED AS ANNEX A HERETO.

 

125


Table of Contents

BIOVENTUS PROPOSAL 1: APPROVAL OF THE SHARE ISSUANCE

This joint proxy statement/prospectus is being furnished to you as an Bioventus stockholder in connection with the solicitation of proxies by the Bioventus board for use at the Bioventus special meeting. At the Bioventus special meeting, Bioventus is asking Bioventus stockholders to consider and vote upon a proposal to approve the issuance of shares of Bioventus common stock to Misonix stockholders in connection with the merger. Based on the number of shares of Misonix common stock outstanding as of September 1, 2021, the latest practicable date prior to the date of this joint proxy statement/prospectus, Bioventus expects to issue approximately 18,322,984 million shares of Bioventus common stock to Misonix stockholders in connection with the merger. The actual number of shares of Bioventus common stock to be issued in connection with the merger will be determined at the effective time based on the exchange ratio of 1.6839 shares of Bioventus common stock for each share of Misonix common stock and the number of shares of Misonix common stock outstanding at such time. Based on the number of shares of Bioventus common stock and Misonix common stock outstanding as of September 1, 2021, the latest practicable date prior to the date of this joint proxy statement/prospectus, upon completion of the merger, former Misonix stockholders are expected to own approximately 25% of the outstanding shares of Bioventus common stock and Bioventus stockholders immediately prior to the merger are expected to own approximately 75% of the outstanding shares of Bioventus common stock.

The Bioventus board, after careful consideration, unanimously determined that the terms of the merger agreement and the merger are fair to and in the best interests of Bioventus and its stockholders, and approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger and the share issuance.

The Bioventus board unanimously recommends that Bioventus stockholders vote “FOR” the Bioventus share issuance proposal.

Assuming a quorum is present at the Bioventus special meeting, approval of the Bioventus share issuance proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Bioventus common stock that are virtually present via the Bioventus special meeting website or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus share issuance proposal. Accordingly, any shares not virtually present or represented by proxy (including due to the failure of an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Bioventus share issuance proposal. An abstention or other failure of any shares virtually present or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus share issuance proposal to vote on the Bioventus share issuance proposal will have the same effect as a vote “AGAINST” the Bioventus share issuance proposal. However, assuming a quorum is present at the Bioventus special meeting, if an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Bioventus share issuance proposal, voting power will deemed to be withheld with respect to the Bioventus share issuance proposal and such failure to provide voting instructions will have no effect on the Bioventus share issuance proposal.

IF YOU ARE AN BIOVENTUS STOCKHOLDER, THE BIOVENTUS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE BIOVENTUS SHARE ISSUANCE PROPOSAL

(BIOVENTUS PROPOSAL 1)

 

126


Table of Contents

BIOVENTUS PROPOSAL 2: ADJOURNMENT OF THE BIOVENTUS SPECIAL MEETING

The Bioventus special meeting may be adjourned to another time and place if necessary or appropriate to permit the solicitation of additional proxies if there are insufficient votes to approve the Bioventus share issuance proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Bioventus stockholders.

Bioventus is asking Bioventus stockholders to authorize the holder of any proxy solicited by the Bioventus board to vote in favor of any adjournment of the Bioventus special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Bioventus share issuance proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Bioventus stockholders.

The Bioventus board unanimously recommends that Bioventus stockholders vote “FOR” the Bioventus adjournment proposal.

Whether or not a quorum is present at the Bioventus special meeting, approval of the Bioventus adjournment proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Bioventus common stock that are virtually present via the Bioventus special meeting website or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus adjournment proposal. Accordingly, any shares not virtually present or represented by proxy (including due to the failure of an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Bioventus adjournment proposal. An abstention or other failure of any shares virtually present or represented by proxy and entitled to vote at the Bioventus special meeting on the Bioventus adjournment proposal to vote on the Bioventus adjournment proposal will have the same effect as a vote “AGAINST” the Bioventus adjournment proposal. However, if an Bioventus stockholder who holds shares in “street name” through a bank, broker or other nominee provides voting instructions for one or more other proposals, but not for the Bioventus adjournment proposal, voting power will deemed to be withheld with respect to the Bioventus adjournment proposal and such failure to provide voting instructions will have no effect on the Bioventus adjournment proposal.

IF YOU ARE AN BIOVENTUS STOCKHOLDER, THE BIOVENTUS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE BIOVENTUS ADJOURNMENT PROPOSAL

(BIOVENTUS PROPOSAL 2)

 

127


Table of Contents

THE MISONIX SPECIAL MEETING

This joint proxy statement/prospectus is being provided to Misonix stockholders in connection with the solicitation of proxies by the Misonix board for use at the Misonix special meeting and at any adjournments or postponements thereof. Misonix stockholders are encouraged to read this entire document carefully, including its annexes and the documents incorporated by reference herein, for more detailed information regarding the merger agreement and the transactions contemplated thereby.

Date, Time and Place of the Misonix Special Meeting

The Misonix special meeting is scheduled to be held at 10:00 a.m., Eastern Time on October 26, 2021, at the Misonix corporate offices, located at 1938 New Highway, Farmingdale, NY 11735.

Misonix currently intends to hold the special meeting in person. However, as part of its precautions regarding the novel coronavirus or COVID-19, Misonix is planning for the possibility that the special meeting may be held solely by means of remote communications. If Misonix takes this step, it will announce the decision to do so in advance, and details on how to participate will be posted on its website at www.misonix.com and filed with the SEC as proxy material.

Matters to Be Considered at the Misonix Special Meeting

The purpose of the Misonix special meeting is to consider and vote on each of the following proposals, each of which is further described in this joint proxy statement/prospectus:

 

   

Misonix Proposal 1: Adoption of the Merger Agreement. To consider and vote on the Misonix merger proposal;

 

   

Misonix Proposal 2: Approval, on an Advisory Non-Binding Basis, of Certain Merger-Related Compensatory Arrangements with Misonix’s Named Executive Officers. To consider and vote on the Misonix compensation proposal; and

 

   

Misonix Proposal 3: Adjournment of the Misonix Special Meeting. To consider and vote on the Misonix adjournment proposal.

Recommendation of the Misonix Board

The Misonix board unanimously recommends that Misonix stockholders vote:

 

   

Misonix Proposal 1: “FOR” the Misonix merger proposal;

 

   

Misonix Proposal 2: “FOR” the Misonix compensation proposal; and

 

   

Misonix Proposal 3: “FOR” the Misonix adjournment proposal.

After careful consideration, the Misonix board unanimously: (i) determined that the terms of the merger agreement and the transactions contemplated thereby are fair to and in the best interests of Misonix and its stockholders; (ii) declared advisable, approved and authorized in all respects the merger agreement, the performance of Misonix of its obligations thereunder and the consummation of the transactions contemplated thereby, on the terms and subject to the conditions set forth in the merger agreement; and (iii) recommended that Misonix stockholders adopt the merger agreement. See “The Merger—Recommendation of the Misonix Board of Directors; Misonix’s Reasons for the Merger.”

Record Date for the Misonix Special Meeting and Voting Rights

The record date to determine Misonix stockholders who are entitled to receive notice of and to vote at the Misonix special meeting or any adjournments or postponements thereof is September 22, 2021. As of the close of business on the Misonix record date, there were 17,425,045 shares of Misonix common stock issued and outstanding and entitled to vote at the Misonix special meeting.

 

128


Table of Contents

Each Misonix stockholder is entitled to one vote for each share of Misonix common stock such holder owned of record at the close of business on the Misonix record date with respect to each matter properly brought before the Misonix special meeting. Only Misonix stockholders of record at the close of business on the Misonix record date are entitled to receive notice of and to vote at the Misonix special meeting and any and all adjournments or postponements thereof.

Quorum; Abstentions and Broker Non-Votes

A quorum of Misonix stockholders is necessary to conduct the Misonix special meeting. The presence of the holders of a majority of the outstanding shares of Misonix common stock entitled to vote at the Misonix special meeting will constitute a quorum. Shares of Misonix common stock represented at the Misonix special meeting in person or by a properly authorized and submitted proxy (submitted by mail, by telephone or over the Internet), entitled to vote, but not voted, including shares for which a Misonix stockholder directs an “abstention” from voting, will be counted for purposes of determining a quorum. However, because all of the proposals for consideration at the Misonix special meeting are considered “non-routine” matters under Nasdaq rules (as described below), shares held in “street name” will not be counted as present for the purpose of determining the existence of a quorum unless the Misonix stockholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals at the Misonix special meeting. If a quorum is not present, Misonix expects that the Misonix special meeting will be adjourned or postponed until the holders of the number of shares of Misonix common stock required to constitute a quorum attend. At any subsequent reconvening of the Misonix special meeting, all proxies will be voted in the same manner as the proxies would have been voted at the original convening of the Misonix special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the subsequent meeting.

Under the listing requirements of Nasdaq rules, banks, brokers or other nominees who hold shares in “street name” on behalf of the beneficial owner of such shares have the authority to vote such shares in their discretion on certain “routine” proposals when they have not received voting instructions from the beneficial owners. However, banks, brokers or other nominees are not allowed to exercise their voting discretion with respect to matters that under Nasdaq rules are “non-routine.” This can result in a “broker non-vote,” which occurs on an item when (i) a bank, broker or other nominee has discretionary authority to vote on one or more “routine” proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other “non-routine” proposals without instructions from the beneficial owner of the shares, and (ii) the beneficial owner fails to provide the bank, broker or other nominee with voting instructions on a “non-routine” matter. All of the proposals before the Misonix special meeting are considered “non-routine” matters under Nasdaq rules, and banks, brokers or other nominees will not have discretionary authority to vote on any matter before the Misonix special meeting. As a result, Misonix does not expect any broker non-votes at the Misonix special meeting and if you hold your shares of Misonix common stock in “street name,” your shares will not be represented and will not be voted on any matter unless you affirmatively instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instructions provided by your bank, broker or other nominee. It is therefore critical that you cast your vote by instructing your bank, broker or other nominee on how to vote. Brokers will not be able to vote on any of the proposals before the Misonix special meeting unless they have received voting instructions from the beneficial owners.

 

129


Table of Contents

Required Votes

The vote required to approve each of the proposals is listed below. As described above, Misonix does not expect there to be any broker non-votes at the Misonix special meeting.

 

Proposal

  

Required Vote

  

Effects of Certain Actions

Misonix Proposal 1:

Misonix merger proposal

   Approval requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Misonix common stock.    An abstention or other failure to vote on the Misonix merger proposal will have the same effect as a vote “AGAINST” the Misonix merger proposal.

Misonix Proposal 2:

Misonix compensation proposal

   Approval requires the affirmative vote of the holders of a majority of the votes cast at the Misonix special meeting.    An abstention or other failure to vote on the Misonix compensation proposal will not have an effect on the Misonix compensation proposal, assuming a quorum is present.

Misonix Proposal 3:

Misonix adjournment proposal

   Approval requires the affirmative vote of the holders of a majority of the votes cast at the Misonix special meeting.    An abstention or other failure to vote on the Misonix adjournment proposal will not have an effect on the Misonix adjournment proposal.

Vote of Misonix Directors and Executive Officers

As of September 1, 2021, the latest practicable date prior to the date of this joint proxy statement/prospectus, Misonix directors and executive officers, and their affiliates, as a group, owned and were entitled to vote 31.62% of the total outstanding shares of Misonix common stock. On July 29, 2021, Stavros Vizirgianakis, Misonix’s Chief Executive Officer and Director, entered into a Voting and Support Agreement with Bioventus and the stockholders named therein, pursuant to which he agreed to, among other things, vote his shares of Misonix common stock in favor of the adoption of the Misonix merger proposal. Although no Misonix director or executive officer other than Mr. Vizirgianakis has entered into any agreement obligating them to vote their shares of Misonix common stock in favor of the proposals at the special meeting, Misonix currently expects that all Misonix directors and executive officers will vote their shares of Misonix common stock “FOR” the Misonix merger proposal, “FOR” the Misonix compensation proposal and “FOR” the Misonix adjournment proposal. See “Interests of Misonix Directors and Executive Officers in the Merger” and the arrangements described in Misonix’s Annual Report on Form 10-K, which is incorporated by reference in this joint proxy statement/prospectus.

Methods of Voting

Registered Stockholders

If you are a Misonix stockholder of record, you may vote at the Misonix special meeting by proxy through the Internet, by telephone or by mail, or by attending and voting at the Misonix special meeting, as described below.

 

   

By Internet: By following the instructions provided on your proxy card.

 

   

By Telephone: By following the instructions provided on your proxy card.

 

   

By Mail: If you have received a paper copy of the proxy materials by mail, you may complete and return by mail the enclosed proxy card in the postage-paid envelope.

 

   

In person at the Misonix Special Meeting: By attending the Misonix special meeting and voting in person.

 

130


Table of Contents

Unless revoked, all duly executed proxies representing shares of Misonix common stock entitled to vote at the Misonix special meeting will be voted at the Misonix special meeting and, where a choice has been specified on the proxy card, will be voted in accordance with such specification. If you submit an executed proxy without providing instructions for any proposal, then the Misonix officers identified on the proxy will vote your shares consistent with the recommendation of the Misonix board on such proposal. If you are a Misonix stockholder of record, proxies submitted over the Internet or by telephone as described above must be received by 11:59 p.m., Eastern Time, on October 25, 2021. To reduce administrative costs and help the environment by conserving natural resources, Misonix asks that you submit a proxy to vote your shares through the Internet or by telephone.

By executing and delivering a proxy in connection with the Misonix special meeting, you designate certain Misonix officers identified therein as your proxies at the Misonix special meeting. If you deliver an executed proxy, but do not specify a choice for any proposal properly brought before the Misonix special meeting, such proxies will vote your shares of Misonix common stock on such uninstructed proposal in accordance with the recommendation of the Misonix board. Misonix does not expect that any matter other than the proposals listed above will be brought before the Misonix special meeting, and the Misonix bylaws provide that the only business that may be conducted at the Misonix special meeting are those proposals brought before the Misonix special meeting by or at the direction of the Misonix board.

Beneficial (Street Name) Stockholders

If you hold your shares of Misonix common stock through a bank, broker or other nominee in “street name” instead of as a registered holder, you must follow the voting instructions provided by your bank, broker or other nominee in order to vote your shares. Your voting instructions must be received by your bank, broker or other nominee prior to the deadline set forth in the information from your bank, broker or other nominee on how to submit voting instructions. If you do not provide voting instructions to your bank, broker or other nominee for a proposal, your shares of Misonix common stock will not be voted on that proposal because your bank, broker or other nominee does not have discretionary authority to vote on any of the proposals to be voted on at the Misonix special meeting. See “—Quorum; Abstentions and Broker Non-Votes.”

If your shares of Misonix common stock are held of record by a broker, bank, trust or other nominee, and you decide to attend and vote at the Misonix special meeting, your vote in person at the Misonix special meeting will not be effective unless you present a legal proxy, issued in your name from the record holder (your broker, bank, trust or other nominee).

Revocability of Proxies

Any Misonix stockholder giving a proxy has the right to revoke it at any time before the proxy is voted at the Misonix special meeting. If you are a Misonix stockholder of record, you may revoke your proxy by any of the following actions:

 

   

by sending a signed written notice of revocation to Misonix’s Secretary, provided such notice is received no later than October 25, 2021;

 

   

by voting again over the internet or via telephone as instructed on your proxy card before the closing of the voting facilities at 11:59 p.m., Eastern Time, on October 25, 2021;

 

   

by submitting a properly signed and dated proxy card with a later date that is received by Misonix no later than the close of business on October 25, 2021; or

 

   

by attending the Misonix special meeting in person and requesting that your proxy be revoked.

Only your last submitted proxy will be considered.

Execution or revocation of a proxy will not in any way affect a Misonix stockholder’s right to attend and vote at the Misonix special meeting.

 

131


Table of Contents

Written notices of revocation and other communications relating to the revocation of proxies should be addressed to:

Misonix, Inc.

Attn: Secretary

1938 New Highway

Farmingdale, NY 11735

If your shares of Misonix common stock are held in “street name” and you previously provided voting instructions to your broker, bank or other nominee, you should follow the instructions provided by your broker, bank or other nominee to revoke or change your voting instructions. If your shares of Misonix common stock are held in street name and you decide to attend and vote at the Misonix special meeting, your vote in person at the Misonix special meeting will not be effective unless you present a legal proxy, issued in your name from the record holder (your broker, bank, trust or other nominee).

Proxy Solicitation Costs

Misonix is soliciting proxies to provide an opportunity to all Misonix stockholders to vote on agenda items, whether or not such Misonix stockholders are able to attend the Misonix special meeting or any adjournment or

postponement thereof. Misonix will bear the entire cost of soliciting proxies from Misonix stockholders, provided that Bioventus has agreed to pay for the printing and mailing costs associated with this joint proxy statement/prospectus. In addition to the solicitation of proxies by mail, Misonix will request that banks, brokers and other nominee record holders send proxies and proxy material to the beneficial owners of Misonix common stock and secure their voting instructions, if necessary. Misonix may be required to reimburse those banks, brokers and other nominees on request for their reasonable expenses in taking those actions.

Misonix has also retained MacKenzie Partners to assist in soliciting proxies and in communicating with Misonix stockholders and estimates that it will pay them a fee of approximately $18,500, plus reimbursement for certain out-of-pocket fees and expenses. Misonix also has agreed to indemnify MacKenzie Partners against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions). Proxies may be solicited on behalf of Misonix or Misonix directors, officers and other employees in person or by mail, telephone, facsimile, messenger, the Internet or other means of communication, including electronic communication. Misonix directors, officers and employees will not be paid any additional amounts for their services or solicitation in this regard.

Householding

SEC rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and notices with respect to two or more stockholders sharing the same address by delivering a single proxy statement or a single notice addressed to those stockholders. This process, which is commonly referred to as “householding,” provides cost savings for companies. Misonix has previously adopted householding for Misonix stockholders of record. As a result, Misonix stockholders with the same address and last name may receive only one copy of this joint proxy statement /prospectus. Registered Misonix stockholders (those who hold shares of Misonix common stock directly in their name with Misonix’s transfer agent) may opt out of householding and receive a separate joint proxy statement/prospectus or other proxy materials by sending a written request to Misonix at the address below.

Some brokers also household proxy materials, delivering a single proxy statement or notice to multiple Misonix stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or notice, or

 

132


Table of Contents

if your household is receiving multiple copies of these documents and you wish to request that future deliveries be limited to a single copy, please notify your broker.

Misonix will promptly deliver a copy of this joint proxy statement/prospectus to any Misonix stockholder who received only one copy of these materials due to householding upon request in writing to: Misonix, Inc., Attn: Secretary, 1938 New Highway, Farmingdale, NY 11735.

Tabulation of Votes

The Misonix board will appoint an independent inspector of election for the Misonix special meeting. The inspector of election will, among other matters, determine the number of shares of Misonix common stock represented at the Misonix special meeting to confirm the existence of a quorum, determine the validity of all proxies and ballots and certify the results of voting on all proposals submitted to Misonix stockholders at the Misonix special meeting.

Adjournments

If a quorum is present at the Misonix special meeting but there are insufficient votes at the time of the Misonix special meeting to approve the Misonix merger proposal, then Misonix stockholders may be asked to vote on the Misonix adjournment proposal.

At any subsequent reconvening of the Misonix special meeting at which a quorum is present, any business may be transacted that might have been transacted at the original meeting and all proxies will be voted in the same manner as they would have been voted at the original convening of the Misonix special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the time the proxy is voted at the reconvened meeting.

Assistance

If you need assistance voting or completing your proxy card, or if you have questions regarding the Misonix special meeting, please contact Mackenzie Partners, Misonix’s proxy solicitor for the Misonix special meeting, by telephone toll-free at 1-800-322-2885, Monday through Friday (except bank holidays), between 8:00 a.m. and 8:00 p.m., Eastern time, or by email at proxy@mackenziepartners.com.

 

LOGO

MISONIX STOCKHOLDERS SHOULD CAREFULLY READ THIS JOINT PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY FOR MORE DETAILED INFORMATION CONCERNING THE MERGER AGREEMENT AND THE MERGER. IN PARTICULAR, MISONIX STOCKHOLDERS ARE DIRECTED TO THE MERGER AGREEMENT, WHICH IS ATTACHED AS ANNEX A HERETO.

 

133


Table of Contents

MISONIX PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

This joint proxy statement/prospectus is being furnished to you as a Misonix stockholder in connection with the solicitation of proxies by the Misonix board for use at the Misonix special meeting. At the Misonix special meeting, Misonix is asking Misonix stockholders to consider and vote upon a proposal to adopt the merger agreement to enable Misonix to consummate the mergers and effect the other transactions in accordance with the terms of the merger agreement. You should read carefully and in its entirety this joint proxy statement/prospectus, including the annexes attached hereto and the documents incorporated by reference, for more detailed information concerning the Misonix merger proposal and the transactions contemplated thereby.

The merger and a summary of the terms of the merger agreement are described in more detail under “The Merger” and “The Merger Agreement,” and Misonix stockholders are encouraged to read the full text of the merger agreement, which is attached as Annex A hereto.

The Misonix board, after careful consideration, unanimously determined that the mergers are fair to and in the best interests of Misonix and its stockholders, and approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger.

The Misonix board accordingly unanimously recommends that Misonix stockholders vote “FOR” the Misonix merger proposal.

Approval of the Misonix merger proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Misonix common stock. Accordingly, an abstention or other failure to vote on the Misonix merger proposal will have the same effect as a vote “AGAINST” the Misonix merger proposal.

It is a condition to the completion of the merger that Misonix stockholders approve the Misonix merger proposal.

IF YOU ARE A MISONIX STOCKHOLDER, THE MISONIX BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE MISONIX MERGER PROPOSAL

(MISONIX PROPOSAL 1)

 

134


Table of Contents

MISONIX PROPOSAL 2: ADVISORY NON-BINDING VOTE ON MERGER-RELATED COMPENSATION FOR NAMED EXECUTIVE OFFICERS

Pursuant to Section 14A of the Exchange Act and Rule 14a-21(c) thereunder, Misonix is required to submit to a non-binding advisory stockholder vote certain compensation that may be paid or become payable to Misonix named executive officers that is based on or otherwise relates to the merger as disclosed under “Interests of Misonix Directors and Executive Officers in the Merger—Quantification of Payments and Benefits to Misonix Named Executive Officers—Golden Parachute Compensation.” The Misonix compensation proposal gives Misonix stockholders the opportunity to express their views on the merger-related compensation of Misonix named executive officers.

Accordingly, Misonix is asking Misonix stockholders to vote “FOR” the adoption of the following resolution, on a non-binding advisory basis:

“RESOLVED, that the compensation that may be paid or become payable to Misonix named executive officers that is based on or otherwise relates to the merger, as disclosed pursuant to Item 402(t) of Regulation S-K under the heading “Interests of Misonix Directors and Executive Officers in the Merger—Quantification of Payments and Benefits to Misonix Named Executive Officers—Golden Parachute Compensation,” including the associated narrative discussion and the agreements, plans, arrangements or understandings pursuant to which such compensation may be paid or become payable, are hereby APPROVED.”

The vote on the Misonix compensation proposal is a vote separate and apart from the vote to adopt the merger agreement. Accordingly, if you are a Misonix stockholder, you may vote to approve the Misonix merger proposal and vote not to approve the Misonix compensation proposal, and vice versa. The vote on the Misonix compensation proposal is advisory and non-binding. As a result, if the mergers are completed, the merger-related compensation may be paid to Misonix named executive officers to the extent payable in accordance with the terms of the compensation agreements and arrangements, even if Misonix stockholders do not approve the Misonix compensation proposal.

The Misonix board unanimously recommends that Misonix stockholders vote “FOR” the Misonix compensation proposal.

Assuming a quorum is present, approval of the Misonix compensation proposal requires the affirmative vote of a majority of the votes cast and entitled to vote at the Misonix special meeting. Accordingly, any shares not present or represented by proxy (including due to the failure of a Misonix stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Misonix compensation proposal, assuming a quorum is present. In addition, an abstention or other failure of any shares present or represented by proxy and entitled to vote at the Misonix special meeting on the Misonix compensation proposal to vote on the Misonix compensation proposal will have no effect on the outcome of the Misonix compensation proposal.

IF YOU ARE A MISONIX STOCKHOLDER, THE MISONIX BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE MISONIX COMPENSATION PROPOSAL

(MISONIX PROPOSAL 2)

 

135


Table of Contents

MISONIX PROPOSAL 3: ADJOURNMENT OF THE MISONIX SPECIAL MEETING

The Misonix special meeting may be adjourned to another time and place if necessary or appropriate in order to permit the solicitation of additional proxies if there are insufficient votes to approve the Misonix merger proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Misonix stockholders.

Misonix is asking Misonix stockholders to authorize the holder of any proxy solicited by the Misonix board to vote in favor of any adjournment of the Misonix special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Misonix merger proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Misonix stockholders.

The Misonix board unanimously recommends that Misonix stockholders approve the proposal to adjourn the Misonix special meeting, if necessary or appropriate.

Approval of the Misonix adjournment proposal requires the affirmative vote of a majority of the votes cast and entitled to vote at the Misonix special meeting. Accordingly, any shares not present or represented by proxy (including due to the failure of a Misonix stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the Misonix adjournment proposal. Additionally, an abstention or other failure of any shares present or represented by proxy and entitled to vote at the Misonix special meeting on the Misonix adjournment proposal to vote on the Misonix adjournment proposal will have will have no effect on the outcome of the Misonix adjournment proposal.

IF YOU ARE A MISONIX STOCKHOLDER, THE MISONIX BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FO