Smith & Nephew’s (NYSE: SNN) spinoff of its biologics and clinical therapies operation into a joint venture will keep the business at its present location in Durham.

But the unit, which will be majority owned by life sciences investing firm Essex Woodlands, will operate under the new name Bioventus.

The group will continue to operate its headquarters in Durham as well as its existing management team.

London-based medical technology giant Smith & Nephew and Essex Woodlands, which has invested in more than 120 life science and healthcare companies, announced the joint venture Wednesday. They expect to close the deal in coming months.

Essex Woodlands will own 51 percent of Bioventus while London-based Smith & Nephew will retain a 49 percent stake. Smith & Nephew will receive $98 million cash, which will be used to pay down debt as well as a $160 million, five-year note from Bioventus.

Smith & Nephew operates three global divisions: Advanced Surgical Devices, Advanced Wound Management, and Biologics & Clinical Therapies.

The Biologics & Clinical Therapies division is focused on less invasive treatments compared to “hardware-based” surgerical options. Medical device products include Exogen, a bone healing system that uses ultrasound. Biologics & Clinical Therapies has grown from $52 million in revenue in 2004 to $223 million in 2010; $33 million of those 2010 sales coming from outside of the United States.

“We see tremendous growth potential with this new venture as more patients discover how active products can help heal and treat joint and bone ailments without invasive surgery,” Marty Sutter, founding partner and managing director of Essex Woodlands, said in a statement. “Smith & Nephew has built an excellent business and we are excited about the prospect of working with the management team on the next phase of growth as it brings more active therapeutic products to market.”

But Smith & Nephew’s overall sales have disappointed and the company decided to pursue changes to improve performance. After the release of third quarter financial results, CEO Oliver Bohuon said the company needed to adapt faster to meet market challenges. In the conference call to discuss financial results, Bohuon signaled forthcoming changes saying, “I think it’s important for us to reinforce our strengths and reinforce the field where we believe the future will be bright.”

The Smith & Nephew biologics division was helmed by President Mark Augusti. He and his management team will move to Bioventus. Smith & Nephew will retain its research facility located in the United Kingdom. Both Smith & Nephew and Essex Woodlands said they will invest “a significant proportion” of Bioventus’ cash flow into R&D over the next five years.

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