Sources say Johnson & Johnson, the world’s largest maker of healthcare products, is pursuing an acquisition of Auris Health.
The deal would bring Johnson & Johnson cutting-edge surgical robotics technology, people with knowledge of the matter said.
J&J is seeking to purchase Auris at a premium to the valuation from its latest funding round, according to the sources. That financing valued the Redwood City, Calif.-based company at about $ 2 billion, one source said.
The closely held firm, led by industry veteran Fred Moll, has developed robotic surgical scopes operated with a handheld device similar to a video game controller. The flexible tubes are steered into a patient’s lungs, where they can be used to identify cancerous tumors.
The search for deals is heating up in the medical technology industry as device makers hunt for innovative products to boost growth. Last month, Medtronic completed a $ 1.7 billion deal to acquire Mazor Robotics, an Israeli company that offers robotics-assisted products that aid in spine and brain surgeries.
Auris itself has raised more than $ 700 million from investors, including the latest $ 220 million equity financing round, announced in November, led by Partner Fund Management. Lux Capital, Viking Global Investors and billionaire Peter Thiel’s Mithril Capital Management are also among its backers.
Representatives for J&J and Auris declined to comment for this story.
Medical companies around the world, including U.K.-based Digital Surgery, are racing to develop technologies that make surgeries safer and less invasive. Auris and a subsidiary of J&J’s medical devices business entered a partnership in May last year to develop integrated systems for robotic control, navigation and application of microwave ablation via bronchoscopes.
In 2015, J&J partnered with Alphabet’s medical arm Verily Life Sciences, to form Verb Surgical, a joint venture to develop the next generation of robotic-assisted tools for surgeons.
“An acquisition of Auris by J&J could be seen as a hedge by J&J on the JNJ/Google Verb partnership, which is also developing a surgical robotic system,” Larry Biegelsen, an analyst with Wells Fargo, wrote in a note to clients Wednesday.
J&J agreed in September 2018 to acquire Emerging Implant Technologies, a German maker of 3-D printed titanium interbody implants for spinal fusion surgery.