Boston Scientific Corp. (BSX:US), the second- largest seller of drug-coated stents, agreed to buy Vessix Vascular Inc. for as much as $425 million to speed its entry into the market for hard-to-treat hypertension devices.
Boston Scientific will pay $125 million for closely held Vessix, based in Laguna Hills, California, and as much as $300 million more by 2017 based on clinical and sales targets, the Natick, Massachusetts-based company said today in a statement. While the acquisition won’t affect earnings excluding one-time items through 2014, the costs and amortization related to the purchase may reduce net income, the company said.
The acquisition is the latest in a buying spree for Boston Scientific, which has purchased (BSX:US) 15 companies in the past five years. The company is looking to expand into new areas as sales of its core products, heart rhythm devices and stents to open clogged arteries, have fallen 13 percent since their peak of $5.4 billion in 2009.
“Vessix Vascular has developed a very simple and easy-to- use renal denervation system” that is a real breakthrough for treating uncontrolled hypertension, Jeff Mirviss, president of peripheral intervention at Boston Scientific, said in an interview. “This significantly accelerates our entry into what we expect to be a multibillion market over the next five to 10 years.”
There are about 1.2 billion people worldwide with high blood pressure, and about one-third don’t respond well to existing drug therapy. Hypertension increases the risk of heart attack, stroke and death from heart disease.
Boston Scientific declined 1.6 percent to $5.08 at the close in New York. The company has dropped 4.9 percent this year.
Medtronic Inc. (MDT:US), based in Minneapolis, is leading the industry in development of the nerve burning devices that Vessix has projected may eventually generate $30 billion in sales. Covidien Plc. (COV:US), based in Dublin, and St. Jude Medical Inc. (STJ:US), based in St. Paul, Minnesota, also have devices approved in Europe.
The Vessix acquisition gives Boston Scientific the V2 Renal Denervation System, which is approved in Europe and Australia to treat people with uncontrolled hypertension. The technology will replace Boston Scientific’s in-house efforts to develop a similar device. The purchase is an important part of the company’s growth strategy, said Chief Executive Officer Mike Mahoney.
The system is a “balloon on a wire,” essentially taking the technology interventional cardiologists use every day to open clogged heart arteries and adapting it to hit nerves in the kidney arteries that can spur high blood pressure. The balloon is fitted with radiofrequency ablation technology that sears the overactive nerves in eight locations in 30 seconds, Mirviss said in a telephone interview.
“It is significantly faster than most of the competitive devices on the market,” Mirviss said. “It will make the procedure more efficient and easier for everyone involved.”
The device enables doctors to treat more patients, exposing them to less pain and a lower amount of contrast dye and radiation from imaging equipment, he said.
Last quarter, Boston Scientific agreed to buy BridgePoint Medical Inc. for its product to treat totally blocked arteries and Rhythmia Medical Inc., which makes equipment to guide doctors during heart procedures. It purchased Cameron Health in June, gaining the first defibrillator that is implanted under the skin rather than directly into the heart.
Boston Scientific has been the second-most-acquisitive medical instruments company this year after Medtronic, data compiled by Bloomberg show. The company has made four deals with an average disclosed deal size of $81.2 million, the data show. The deal size doesn’t include milestone payments. Medtronic has made six purchases during the same period.
Boston Scientific plans to close the acquisition by the end of the month. It will introduce the V2 system starting next year and begin the study needed for U.S. approval by the end of 2013 or early 2014, Mirviss said.
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