Boston Scientific Corp. (BSX) said Thursday that it will pay up to $425 million to buy privately-held Vessix Vascular Inc. in a deal expected to close by the end of the month. The Vessix acquisition, the latest in a five-year, 15-company buying spree for Boston Scientific, is anticipated to expedite the company’s entrance into the hypertension device market. Vessix is the developer of a catheter-based renal denervation system for treatment of uncontrolled hypertension.
Natick, Massachusetts-based Boston Scientific will pay $125 million initially and up to $300 million in milestone payments between 2013 and 2017 based upon clinical and sales targets being met. The acquisition is not expected to be accretive to Boston Scientific at least through 2014.
Upon closing the transaction, Vessix will become part of the Peripheral Interventions business arm at Boston Scientific.
Approximately 1.2 billion people globally have high blood pressure, increasing the risk of stroke, heart attack and heart disease. Renal denervation, which uses radio frequencyto disrupt the renal sympathetic nerves whose hyperactivity leads to uncontrolled high blood pressure, is evolving as a leading therapeutic for patients who don’t respond well to today’s standards of care. An ablation , renal denervation burns hyperactive nerves in kidney arteries.
“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,” said Mike Mahoney, president and CEO at Boston Scientific in this morning’s statement.
Through the acquisition, Boston Scientific will now have Vessix’s V2 Renal Denervation System, allowing it to scrap its in-house efforts to build a product to compete with similar devices from companies like Covidien Plc (COV), St. Jude Medical Inc. (STJ) and Medtronic Inc. (MDT). Laguna Hills, California-based Vessix already has European and Australian approvals for its V2 system. A full launch for sales in CE-Mark countries has been initiated already by Vessix. Research required for FDA clearance in the U.S. is slated to begin next year.
Apropos, even though Boston Scientific has been on a frantic pace regarding acquisitions, Medtronic still is outpacing them. In 2012, BSX has made four deals while Medtronic has made six.
Closing Wednesday’s trading session at $5.16, shares of Boston Scientific are basically flat in 2012. Technically speaking, the company has only had one trading day this year that has seen shares break below $5 each, which is now established as a firm bottom support level. Shares peaked in 2012 at $6.41 during April.
Medical device peers COV (+8%), STJ (+21%) and MDT (+10%) have performed better to date across 2012.