(By Balaseshan) Boston Scientific Corp. (NYSE: BSX) said it is extending its reach into the strategically critical renal denervation market by agreeing to acquire Laguna Hills, California-based privately-held Vessix Vascular Inc. for $425 million.
The agreement calls for an upfront payment of $125 million, plus additional clinical- and sales-based milestones aggregating a maximum of $300 million over the period between 2013 and 2017.
Boston Scientific currently expects the net impact of this transaction on adjusted earnings per share to be immaterial for years 2013 and 2014 and break-even to accretive thereafter, and more dilutive on a GAAP basis as a result of acquisition-related net charges and amortization, which will be determined during the fourth quarter.
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Vessix Vascular has developed a catheter-based renal denervation system for the treatment of uncontrolled hypertension. Boston Scientific said renal denervation represents a potential breakthrough therapy for the treatment of uncontrolled hypertension and is an important part of the company's 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, chief executive at Boston Scientific.
Upon completion of the acquisition, Vessix Vascular will become part of the Peripheral Interventions business at Boston Scientific. The portfolio of this business includes products that treat vascular system blockages in areas such as the carotid and renal arteries and the lower extremities.
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Renal denervation is an emerging, catheter-based therapy for medication-resistant hypertension that uses radio-frequency energy to disrupt the renal sympathetic nerves whose hyperactivity leads to uncontrolled high blood pressure.
The Vessix Vascular V2 Renal Denervation System has received CE Mark in Europe and TGA approval in Australia. Vessix Vascular has initiated the REDUCE-HTN post-market surveillance study and expects to initiate a full launch of the product in CE Mark countries in 2013.
The V2 Renal Denervation System is an investigational device and not available for use or sale in the United States. The acquisition is expected to close by the end of November 2012.
BSX is trading down 0.19 percent at $5.15 on Thursday. The stock has been trading between $4.79 and $6.41 for the past 52 weeks.