Aliso Viejo, Calif.-based Cianna makes the Savi Scout wire-free breast tumor localization system, designed to produce audible and visual indicators surgeons can use to tag cancerous tissue during lumpectomy and biopsy procedures. The device won 510(k) clearance from the FDA in December 2014.
The deal with South Jordan, Utah-based Merit, expected to close during the fourth quarter, calls for an up-front cash payment of $135 million, plus $15 million in earn-outs pegged to supply chain and scalability goals and another $50 million in sales milestones.
“This transaction adds to Merit a technology leader in breast tumor localization that is precise, highly directional, and visible,” founder, chairman & CEO Fred Lampropoulos said in prepared remarks. “With more than 350 initiations and 45,000 wire-free localizations to date, the Savi Scout is complementary to Merit’s strategic biopsy initiatives. The product has FDA clearance and is the subject of a pending application for CE Mark approval. We believe there are substantial global growth opportunities for the Cianna Medical products, especially considering Merit’s expansive global footprint.”
“The planned merger is a fusion of shared values focused on addressing real healthcare needs that improve lives. Our companies share a rich history of developing technologies that put patients’ needs first. Merit Medical brings exceptional resources to the Cianna Medical team that will intensify its growth and broaden its focus beyond breast cancer. I am delighted that Mr. Lampropoulos will lead an efficient integration of our companies for the benefit of our employees, physicians, hospitals and the women we serve,” added Cianna Medical president & CEO Jill Anderson.
Lampropoulos said Merit plans to keep “substantially all” of Cianna’s commercial and R&D teams in place, adding logistical and clinical support to enter new markets.
“Additionally, Merit intends to market the Savi Brachy, which uses thin tubes to deliver radiation to lumpectomy sites,” he said. “Merit only markets the catheter and is not involved in radiation seeds or the transport thereof. The product has both FDA clearance and CE mark approval. Merit’s medical advisors believe this is an underutilized technology.”
The Scout device is projected to bring in sales of $29 million this year, with an estimated market share of 5%. Merit said it expects the buyout to add 8¢ to 13¢ in adjusted earnings per share next year on sales of $50 million to $56 million.
Piper Jaffray and Raymond James were financial advisors to Merit, with Parr Brown Gee & Loveless as legal advisor. J.P. Morgan Securities advised Cianna, with Wilson Sonsini Goodrich & Rosati as legal advisor.
At DeviceTalks Boston, Tyler Shultz will give attendees an inside look at Theranos and how he was able to sound the alarm after he realized the company was falling apart. Shultz will take attendees behind the story that everyone is talking about: the rise and fall of Elizabeth Holmes and her diagnostic company, Theranos.
Join Shultz and 1,000+ medical device professionals at the 8th annual DeviceTalks Boston.