Boston Scientific (NYSE:BSX) and Cameron Health sealed the deal on a merger worth up to $1.35 billion.
Boston Scientific paid $150 million at closing, with another $150 million to be paid out on FDA approval of Cameron’s subcutaneous ICD system. The merger includes up to $1.05 billion in milestone payments tied to revenue-based achievements for the 6 years following the hoped-for FDA approval, according to a Boston Scientific press release.
Cameron Health developed the world’s first and only lead-free implantable cardioverter defibrillator, which sits just under the skin and, unlike traditional ICDs, does not require wires threaded into the heart in order to provide therapy.
The S-ICD device is awaiting final word from the FDA, having won a positive vote from the federal watchdog agency’s advisory committee in April.
The S-ICD device has had CE Mark approval in the European Union since 2009.
Clinical trial data debuted at the Heart Rhythm Society meeting in Boston last month found that the S-ICD system had comparable safety and effectiveness to traditional ICDs in treating life-threatening ventricular arrhythmias.
The device, which is slightly larger than traditional ICDs, is implanted under the arm. Its major innovation is that the leads that transmit electricity to the heart are implanted in a surgically created channel along the patient’s chest, leaving blood vessels "untouched." The regulating shock is delivered to the heart through the breastbone.
"We are pleased to complete the acquisition of Cameron Health, furthering Boston Scientific’s commitment to introducing innovation in the CRM space," Boston Scientific CEO Hank Kucheman said in prepared remarks. "Boston Scientific now provides physicians and their patients with an option to choose either the industry’s thinnest, longest-lasting transvenous ICD or the world’s first and only commercially available completely subcutaneous ICD."
Analysts were confident that the S-ICD system would pass muster with the FDA, but wondered whether a substantial market exists for the devices.
"Our view remains that the Cameron (device), if approved, is likely to be niche product," Goldman Sachs analyst David Roman wrote in a note to investors in April.
J.P. Morgan analyst Michael Weinstein agreed, writing in a separate note that the larger S-ICD device, which also delivers larger and potentially more painful shocks, may not be so alluring to patients. He noted, however, that the safety issues highlighted by the FDA shouldn’t prevent the device from winning approval.
BSX shares gained 0.9%, trading around $5.71 as of about 4:15 p.m. today.
