UPDATED Nov. 8, 2012, 11:15 a.m. with additional comments from Boston Scientific
Boston Scientific (NYSE:BSX) CEO Michael Mahoney, about a week into his tenure as CEO, isn’t wasting any time making good on a pledge to grow non-core businesses. The Natick, Mass.-based medical device company today said it’s agreed to pay $425 million to acquire Vessix and its high blood pressure treatment.
Laguna Hills, Calif.-based Vessix makes the V2 renal denervation system, a catheter-based device that ablates the nerve lining the renal artery that are believed to play a role in high blood pressure, or hypertension.
The deal, expected to close by the end of the month, calls for BSX to pay $130 million in up-front cash plus another $300 million in milestone-based payments from 2013-2017. Those payments are pegged to a series of clinical and sales goals, according to a press release.
"Hypertension is a major global healthcare challenge, affecting more than one billion people worldwide," Mahoney said in prepared remarks. "Renal denervation represents a potential breakthrough therapy for the treatment of uncontrolled hypertension and is an important part of the Boston Scientific growth strategy. The acquisition of Vessix Vascular adds a second generation, highly differentiated technology to our hypertension strategy while accelerating our entry into what we expect to be a multi-billion dollar market by 2020."
The Vessix deal jump-starts its presence in the renal denervation space, alongside rivals St. Jude Medical (NYSE:STJ) and Medtronic (NYSE:MDT). The V2 device won CE Mark approval in the European Union in May and is also approved for the Australian market.
In October, BSX chief medical officer Dr. Keith Dawkins told MassDevice.com that the company is developing a renal denervation technology in-house. In a statement emailed to us this morning, the company said that although the Vessix acquisition "builds on the strong foundation of technology established through our internal hypertension programs," it’s pulling the plug on a 1st-in-human study of its own renal denervation technology and cancelling plans to commercialize its 1st-generation single-electrode device.
"As a result of this acquisition, we are shifting our internal resources to the Vessix Vascular V2 renal denervation system to bring what we consider to be a highly-differentiated device to market as quickly as possible. We will not be moving forward with our 1st-in-man study, nor will we commercialize our first generation, single point system," according to the statement.
Boston Scientific said the deal, which will see Vessix integrated into its peripheral interventions segment, isn’t expected to add to adjusted earnings per share next year or in 2014 and "break-even to accretive thereafter," according to the release.
Last year Vessix landed a $23 million Series B round led by Edmond de Rothschild Investment Partners. Today the investment house said the made a 10x multiple on its $10 million investment in Vessix.
"We are proud to have backed Vessix’s team which, in our view, delivered the best product for renal denervation as well as an excellent exit opportunity for its shareholders. Our investment thesis has been confirmed: Vessix’s product has been shown to be user-friendly, safe and effective in patients while dramatically reducing treatment time and thus representing an attractive business case also for potential buyers. The total transaction value allows us to make up to 10x on the investment we made one and a half years ago. This exit demonstrates our ability to support the best US companies in their clinical development in Europe," Raphaël Wisniewski, Edmond de Rothschild Investment Partners’ representative on Vessix’s board, said in a press release.
