* Enters renal denervation market with acquisition
* Renal denervation can help hypertension when drugs fail
* Seen as multi-billion market by 2020
* Boston Scientific shares flat
By Debra Sherman
Nov 8 Boston Scientific Corp said on
Thursday it will acquire privately-held Vessix Vascular Inc, a
developer of a catheter-based device that treats high blood
pressure by deadening nerves near the kidneys.
Boston Scientific, a maker of heart pacemakers, implantable
defibrillators and heart stents, joins a growing line-up of
medical device makers offering this new treatment.
Under terms of the deal, expected to close at the end of
November, Boston Scientific will make an upfront payment of $125
million, plus milestone payments of up to $400 million between
2013 and 2017. The deal is expected to be immaterial to adjusted
earnings in 2013 and 2014, and break-even to profitable
One in three adults in the United States has high blood
pressure, according to the National Institutes of Health.
Health officials say more than one billion people in the
world suffer from the ailment, also known as hypertension, which
can lead to coronary heart disease, heart failure, stroke,
kidney failure, and other health problems.
Normal blood pressure is below 120/80 mmHg (millimeters of
mercury). Hypertension is a reading above 140/90 mmHg.
Despite widespread availability of drugs to treat the
condition, blood pressure in many patients remains uncontrolled.
Renal denervation is a procedure in which a thin, flexible
catheter is threaded through the body to the renal sympathetic
nerves near the kidneys. Radiofrequency energy is delivered to
disrupt the nerve activity, relieving high blood pressure.
Renal denervation is expected to be a multibillion dollar
market by 2020, according to Boston Scientific.
The new therapy is not yet approved in the United States,
but several products are available in Europe.
Device makers that have received approval to sell
hypertension devices in Europe include front runner Medtronic
Inc, St Jude Medical Inc, Covidien Plc,
ReCor Medical and Vessix, which also has approval in Australia.
Bernstein Research analyst Derrick Sung said the price
Boston Scientific is paying is on the high end compared with the
most recent renal denervation deals.
For example, he noted that Medtronic paid $800 million, plus
milestone payments equal to the annual growth in sales through
2014 for Ardian, a maker of a renal denervation system. He said
Ardian's high price is justified by the fact that the
intellectual property gives Medtronic a 2- to 3-year lead in the
United States. Covidien recently paid $60 million for Maya
Medical, plus up to $170 million in milestone payments.
"It appears that Boston Scientific is valuing Vessix at
about an 84 percent premium to the valuation that Covidien put
on Maya," he wrote in a research note.
Sung also said he was surprised by the deal because the
company had indicated it was moving forward with its internal
renal denervation program.
"As recently as two weeks ago... management had indicated to
us that they were planning to go first-in-man with their
internally developed single-electrode renal denervation system
before the end of this year, and were on track to follow closely
with their second generation multi-electrode system," Sung
"Boston Scientific's acquisition of Vessix suggests to us
that Boston Scientific's internal program may not have been as
far along as management had given us to believe," he added.
Boston Scientific shares were trading at $5.15, down 1 cent,
on the New York Stock Exchange.